Exam 10: Payroll Liabilities

Jack Slack is CEO of Slack Industries. The bank declined to give Slack Industries the needed funds to finance the business expansion plans. Jack is now looking for ways to secure cash hoping he can get sufficient cash to finance the expansion. Jack approaches you as the company's accountant. He knows that you are due to make government remittances for source deductions the company withheld from employees for CPP, EI, and personal income taxes. Jack asks you to delay the remittance until he feels more confident about getting other financing. Jack believes it is fine to delay payments because Slack will definitely remit the withholdings before the T4s are produced at year end. Required: a) Describe the duty that Slack Industries has to remit employee deductions withheld at source? b) Is withholding the remittances ethical? Why?

Each time a payroll is recorded, a General Journal entry should also be made to record the employer's CPP and EI amounts payable.

Payroll taxes and employee fringe benefits sometimes amount to more than 25 percent of the wages earned by employees.

Welch Company has 7 sales employees, each of whom earns $2,500 per month and is paid the last working day of the month. CPP is 4.95% and EI is 1.66%. Withholdings for the employees also include federal and provincial income tax of $2,800 (total for all five) and medical insurance premiums of $210 for each employee. 1) Prepare the general journal entry to accrue the payroll on March. 2) Prepare the general journal entry to record Welch Company's payroll tax expense for March.

A record of an employee's hours worked, gross pay, deductions, net pay, and certain personal information about the employee is an employee's

Canada Pension Plan is levied equally on the employee and the employer.

Accrued wages are subject to payroll taxes before they are paid.

The amount of federal income tax to be withheld from each employee's wages is determined solely by the amount of wages earned.

A tax levied on the amount of a payroll or on the amount of an employee's gross pay is a(n)

Most employers promise and grant their employees an annual paid vacation.

A tax levied by a province, the proceeds of which are used to pay benefits to workers who have been injured on the job, is called

Employment Insurance is withheld from employees' wages at the rate of 1.83% on only the first $100 earned weekly.

Small Company's 16 sales personnel earned total salaries of $18,000 during the period April 5-10, all of which were subject to 4.95% CPP, 1.66% EI. The employees were also entitled to 6% annual vacation pay. Prepare the general journal entries on April 10 to accrue the payroll benefits arising from this payroll.

The same form is used to report both the employer share of payroll taxes and employee income taxes withheld.

A company's sales personnel earned salaries of $15,000 during the pay period December 5-10, all of which were subject to 1.66% EI withholdings. All employees had reached the annual maximum earnings for the Canada Pension Plan. In addition, the company has agreed with its employees to withhold the following amounts: $900 for hospital insurance, $2,600 for federal and provincial income taxes, and $180 for union dues. Calculate the general journal entry credit amount on December 10 to "Salaries Payable."

Canada Pension Plan is withheld from wages earned, except the withholding stops each year as soon as the employee has earned the maximum pensionable earnings for that year.

Employment Insurance is withheld from wages earned, with the withholding to stop in 2018 as soon as the employee has earned $4,500.

Net pay is

To account for vacation pay, employers should record the vacation pay expense in the accounting period when it is paid.

A company has 10 employees who earned a total of $30,000 in January ($3,000 each). CPP taxes are 4.95% paid by employees and 4.95% paid by the employer. Income tax withholdings amount to $4,500. The employee EI rate is 1.66% of the total, and the employer EI contribution is 1.4 times the employee portion. The gross pay of the 10 employees during January is