SOLUTIONS MANUAL: CHAPTER 2 END OF CHAPTER ANSWERS

SM 2-1

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SOLUTIONS MANUAL: CHAPTER 2 END OF CHAPTER ANSWERS

ANSWERS TO STOP AND CHECK EXERCISES

What’s in the File?

• a,b,d,e
• b
• d
• a
• c
• Monthly = $4,333.33

Semi-monthly = $2,166.67 Biweekly= $2,000 Weekly - $1,000

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.

Worker Facts

• Nonexempt
• Exempt workers receive a fixed amount of money and generally direct the actions of other

employees; nonexempt workers are eligible for overtime, and generally have their work directed by a manager.Payroll Accounting 2015 1st Edition Landin Solutions Manual Visit TestBankDeal.com to get complete for all chapters

SM 2-2

Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

• A beverage distribution driver, full-time life insurance agents for a single life-insurance

company, home workers that use furnished materials, traveling salespersons who work on a single employer’s behalf.

Who Does Which Job?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 are some 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

SM 2-3

Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

• 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

• When must a terminated employee be paid his or her final paycheck?
• 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

• When does a payroll record retention period begin?
• Disbursement of pay
• 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

SM 2-4

Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

• Labor unions
• How long must employers keep terminated employee records?
• Seven years
• Are independent contractors included in company payroll? Why or why not?
• 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.

• 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.

• 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

2-1A. 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 over

• per day and for those over 40 in a week. During the week she worked the following schedule:

Monday 8:00–11:00, 12:00–4:30 7.5 Tuesday 8:00–11:00, 12:00–5:15 8.25 Wednesday 8:00–11:00, 12:00–5:00 8 Thursday 8:30–5:00 (no lunch) 8.5 Friday 8:00–6:00 (no lunch) 10