SOLUTIONS MANUAL: CHAPTER 2 END OF CHAPTER ANSWERS

SM 2-1

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

SOLUTIONS MANUAL: CHAPTER 2 END OF CHAPTER ANSWERS

ANSWERS TO STOP AND CHECK EXERCISES

What’s in the File?

• a,b,d,e

Match the pay frequencies:

• b
• d
• a
• c

Who Are You?

• Student answers will vary. One possible way to prove both identity and employment is a

current U.S. passport. Alternatively, a current state-issued driver’s license and a social security card will work for the purposes of the I-9.

• Student answers will vary. Many students may underestimate their estimated exemptions.
• Drivers for a single company or is paid on commission; full-time life insurance or annuity

sales staff; home worker on goods to be returned to the company; full time traveling salesperson Worker Facts

• Nonexempt
• Exempt workers receive a fixed amount of money regardless of the number of hours worked;

nonexempt workers are eligible for overtime.

• Commission workers are typically tied to sales completed by the individual; piece-rate pay is

determined by the number of pieces the employee completes during a shift or period.Who Does Which Job?Payroll Accounting 2017 3rd Edition Landin Solutions Manual Visit TestBankDeal.com to get complete for all chapters

SM 2-2

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Student answers will vary. The answer should reflect a clear separation of duties, cross-training, rotation of tasks, and security protocols.Internal Controls and Audits

• b
• c

Destroy and Terminate

• Paper payroll records should be shredded or burned. Computer records should be purged from

the server and all other storage devices.

• Charlie should receive his final pay on October 12, and not later than October 13. His

employer is not required to provide him with a severance package, although he may be eligible for his accrued vacation pay.

ANSWERS TO END-OF-CHAPTER MATERIALS

REVIEW QUESTIONS

• What constitutes internal controls for a payroll department?
• Payroll system design, authorized signers, documentation, and review of the

process

• Why should more than one person prepare/verify payroll processing?
• Internal controls and verification to avoid fraud or theft
• What documents are required in all new hire packets?
• I-9 and W-4
• Why are new hires required to be reported to the state’s employment department?
• The enforcement of child support and legal withholdings, ensuring immigrants are

still eligible to work, verification of professional licensing/qualifications, administration of COBRA benefits

SM 2-3

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

• For the state in which you live, when must a terminated employee be paid his or her final

paycheck?

• Student answers will vary, this is a state specific regulation time ranging from the

point of discharge to no time requirements.

• What are the five main payroll frequencies?
• Daily, weekly, biweekly, monthly, semi-monthly
• What are some of the best practices in establishing a payroll system?
• Keep any requests for leave with the related paystubs, file retention schedule,

have more than one person responsible for the duties/verification, and separation of duties

• What are the important considerations in setting up a payroll system?
• Pay frequency, pay types, method of payment, benefits,

manual/computerized/outsourced payroll processing, file security system

• What are the different tasks involved in payroll accounting?
• Entering the employees, entering the hours, calculation of gross wages,

preparation of paychecks, payment of taxes, reporting requirements 10.When does a payroll record retention period begin?

• Disbursement of pay

11.What agencies or organizations can audit a company’s payroll records?

• The Internal Revenue Service (IRS)
• Federal and State Departments of Labor
• Department of Homeland Security
• Other state and local agencies
• Labor unions

12.How long must employers keep terminated employee records?

• Seven years from the date of termination

13.Are independent contractors included in company payroll? Why or why not?

SM 2-4

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

• It depends; some independent contractors are not included in the company’s

payroll, but are treated as vendors. Some independent contractors are considered statutory employees and would be included in the company’s payroll.

14.What is the difference between termination and resignation?

• An employee is terminated by the employer; when the employee initiates the

separation it is a resignation. Employees who resign will receive their final paycheck in the normal payroll cycle, whereas terminated employees may be required to receive theirs sooner.

15.What is the difference between weekly, biweekly, semi-monthly, and monthly pay periods?

• A weekly pay period is for one week, biweekly pay period is two weeks long,

semi-monthly pay period is twice a month, and monthly pay period is once a month.

EXERCISES SET A

E2-1A. Amanda, a nonexempt employee at Old Tyme Soda Distributing, works a standard 8:00–5:00 schedule with an hour for lunch. Amanda works in a state requiring overtime for hours

in excess of 40 in a week. During the week she worked the following schedule:

4. 2.25

E2-2A. Carlie receives her pay twice per month. Which of the following choices describes her pay frequency?

• Semimonthly

E2-3A. Roberto is a new employee for McGee's Windows. Which Federal forms must he complete as part of the hiring process?

1. W-4

4. I-9

E2-4A. Angela, a resident of Texas, ended her employment on December 8, 2016. The next pay date for the company is December, 20. By what date should she receive her final pay?