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Payroll Accounting 2024 Landin 34th Edition by Bernard J. Bieg and Bridget Stomberg
Payroll Accounting 2024 Landin 34th Edition by Bernard J. Bieg and Bridget Stomberg
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SM 7-1SOLUTIONS MANUAL:
Payroll Accounting 2024 Landin 34th Edition by Bernard J. Bieg and Bridget
Stomberg
Chapter 1-7
Chapter 1
Which Law?
1. K
2. H
3. B
4. F
5. I
6. J
7. A
8. D
9. G
10. C
11. E
12. L
Which Payroll Law?
1. D
2. A
3. F
4. C
5. G
6. J
7. B
8. I
9. E
10. H
What’s Ethical?
1. Answers will vary. Some concerns include data privacy and integrity in the software
switchover, tax and employee pay integrity on the new software, and employee pay methods.
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, SM 7-2
2. Answers will vary. Karsyn could choose to ignore her sorority sister’s request, claiming
Confidentiality. She could also discontinue active participation in the sorority. In any case,
Karsyn must not consent to her sorority sister’s request for confidential information.
Confidential Records
As the payroll clerk, your task is to protect the privacy and confidentiality of the information you
maintain for the company. If a student group—or any personnel aside from the company’s
payroll employees and officers—wishes to review confidential records, you should deny their
request. If needed, you should refer the group to your department’s manager to discuss the matter
in more depth. The laws that apply to this situation are the Privacy Act of 1974, U.S. Department
of Health and Human Services Privacy Act 09-40-0006, Common-Law Privacy Act, Computer
Fraud and Abuse Act, and potentially HIPAA.
Large vs. Small
1. Large companies face issues with multiple departments, employee access to online
personnel portals, employee data security, and timekeeping accuracy.
2. For small companies, payroll processing will involve fewer employees than for larger
companies. Smaller companies could maintain their payroll needs using company
personnel because of the lower volume of transactions. Larger companies need to
consider their available trained payroll accountants and other staff to determine if they
can reliably handle the volume of payroll needs in a timely and accurate manner.
What Is the Difference?
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, SM 7-3
a. Manual payroll systems involve the use of paper and pencil record-keeping or a
spreadsheet program, such as Microsoft Excel. This is most appropriate for very small
firms.
b. Computerized payroll systems can be used by any company, regardless of size. Examples
of computerized systems include QuickBooks, Sage 100, and Microsoft Dynamics 365
GP. These computer packages range in price, depending on the company size and
operational scope.
c. Outsourced payroll involves the engagement of a third party to manage a company’s
payroll data, issue employee compensation, and prepare tax forms.
d. Certified payroll pertains to companies with employees who work on federal government
contracts. Certified payroll ensures that a company reports payroll expenditures of
contractually allocated money.
ANSWERS TO END-OF-CHAPTER MATERIALS
REVIEW QUESTIONS
1. What is the purpose of a payroll system?
a. Provide for internal and external reporting of employee wages and associated taxes,
payment of employee compensation, and monitoring of benefits to employees. It also
serves as a means of tracking labor costs that managers use for decision-making,
budgeting, and planning.
2. What are two differences between large- and small-company payroll practices?
a. Small companies would have fewer employees and reporting requirements and would
be less likely to be required to have automated payroll systems.
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, SM 7-4
b. Large companies have more employees and greater departmentalization. This
increase in employees leads to a higher level of complexity in payroll accounting,
disbursements, and reporting. Larger companies may also provide Intranet portals for
employee self-service options. Additionally, larger companies may need additional
accuracy checks.
3. What is certified payroll? Which companies must use it?
a. Certified payroll is a reporting requirement for companies that work with federal
contracts that are subject to Davis-Bacon wages. Only those companies that have
these types of employees would be required to complete a certified payroll.
4. Why might it be a good idea to let employees manage their payroll records? What are some
of the pitfalls?
a. An advantage of allowing individuals to self-manage their payroll records would be
the employee would be able to answer some simple questions on their own without
having to come to the payroll accountant for answers. If employees have access to
their payroll records, there would be the need to allow multiple access points to the
confidential information. These open channels would require security settings to
ensure the requirements of confidentiality are maintained.
5. What are two ways a payroll system may protect a company in the event of a visit from a
government auditor?
Answers may vary, but should contain:
a. The establishment and maintenance of an accurate payroll system. Timely and
accurately reporting wages and withholdings. Adherence to the legal framework of
payroll.
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, SM 7-5
6. What is payroll outsourcing? When might a company consider outsourcing its payroll?
a. Payroll outsourcing is the process of contracting another company for the preparation,
reporting, and filing of employee payroll. Companies may consider this option if the
company sees a benefit to the company that outweighs the cost of outsourcing.
7. What are three examples of federal laws that are essential to ensure legal, fair hiring
practices?
Answers should contain three the following:
a. American with Disabilities Act
b. Age Discrimination in Employment Act
c. Fair Labor Standards Act
d. Civil Rights Act
8. What are the major types of payroll processing methods?
a. Manual
b. Computerized
c. Outsourced
d. Certified
9. What are two laws governing the taxes that employers must withhold from employees?
a. 16th Amendment of the U.S. Constitution
b. Social Security Insurance Act
10. What are the guidelines for FLSA, in terms of overtime and pay rate?
a. Maximum hours that covered individuals can work
b. Minimum pay for covered individuals
c. Minimum age for workers
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, SM 7-6
d. Mandatory break times for covered employees
11. Why was the Social Security Act of 1935 created? What were its provisions?
a. The Social Security Act of 1935 was designed to create a contribution-driven fund to
achieve a level of financial stability for the worker when he or she became too old or
infirm to work.
12. How did the Medicare and Medicaid Act of 1965 modify the Social Security Act of 1935?
a. It was passed to fund medical services needed by older adults, disabled persons, and
low-income individuals.
13. What are two of the advantages of a computerized payroll system over a manual system?
a. A computerized payroll system can meet the tax and regulatory requirements
efficiently and can typically be set to automatically update for tax law changes. Web
portals can streamline overtime reporting and other functions. A recent trend in
computerized processing is the issuance of employee paycards.
14. Which Act created the term ―full-time equivalents‖?
a. The Affordable Care Act created the term full time equivalents to determine the
number of employees that should be offered health care coverage under the act.
15. How has cloud-based payroll processing affected contemporary payroll practices?
a. Cloud-based payroll processing allows a company the scale of larger corporations
without the additional licensing or responsibilities for updates. Cloud-based services
can contain security comparable with on-site accounting software.
16. What are two differences between the completion of the I-9 and E-Verify systems?
Answers may vary, but could contain the following:
a. I-9 is mandatory while E-Verify is voluntary.
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
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, SM 7-7
b. I-9 does not require a Social Security number while E-Verify does.
c. I-9 does not require a photo identification (List B) while E-Verify does.
d. I-9 must be used to reverify expired employment authority while E-Verify may not be
used for this purpose.
17. What was the purpose of the SECURE Act?
a. The SECURE Act provided tax incentives for small employers to create automatic
retirement plans for their employees.
18. What are two of the challenges that arise from the use of outsourced payroll systems?
Answers may vary, but should contain:
a. Late penalties
b. Loss of credibility
c. Flawed payroll
d. Security breaches of personnel information
19. What distinguishes a ―living wage‖ from the minimum wage?
a. The federal labor standards act depicts the federal minimum wage. While several
states may have a rate over this, the living wage would need to exceed the poverty
level for the family size and geographic region.
20. How does the Equal Pay Act of 1963 differ from the Lilly Ledbetter Fair Pay Act of 2009?
a. While the Equal Pay Act of 1963 mandated that men and women receive equal
compensation for comparable work, Lilly Ledbetter Fair Pay Act of 2009 removed
the statutory timeframe for filing the allocation of unfair pay practices.
21. What are the differences between ARPA and TCDRA?
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, SM 7-8
a. American Rescue Plan Act of 2021 (APRA) extended employee retention credits and
family/sick leave related to COVID-19 through September 30, 2021. APRA increased
the rate to $12,000 and eliminated the 10-day waiting period. Taxpayer Certainty and
Disaster Recovery Tax Act of 2020 (TCDRA) also extended the employee retention
tax credits and changed the amount per employee. TCDRA extended the date through
June 30, 2021 and increased the amount to $14,000. The definition of qualified wages
for both over and under 500 employees was also altered. TCDRA also allowed
employers to take a refundable credit against their share of the Social Security taxes,
up to 70% of the qualified wages paid to employees between December 31, 2020 and
June 30, 2021.
22. What did ARPA and TCDRA do to the CARES Act?
a. Both the ARPA and TCDRA extended benefits of the CARES Act and made
alterations to the amount of employee retention credits.
EXERCISES – SET A
E1-1A. Lupore Fabrics obtained a contract in Watts Mills, South Carolina, which involves the
production of materials for military uniforms, a project contracted with the federal government
for $2,800,000. What laws govern the wages Lupore Fabrics pays to its workers for this project?
(Select all that apply.)
1. Davis-Bacon Act
3. Walsh-Healey Act
4. FLSA – Fair Labor Standards Act
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, SM 7-9
E1-2A. Dylan Piccirillo works as the payroll clerk for Centinix, a security company that hires
many part-time and temporary workers paid hourly. What law(s) govern(s) the hiring or
documenting of these workers? (Select all that apply.)
2. FLSA
3. IRCA
E1-3A. London Franco was dismissed from employment at Precision Dynamics because of a
race-related incident. Enzo sued Precision Dynamics for $150,000 because of the discrimination.
Which of the following laws provides for monetary awards during discrimination lawsuits?
4. Civil Rights Act of 1991
E1-4A. Ines, Inc. is a qualified private-sector company that provides health insurance to its
employees. The company is self-insured. Which of the following forms should the company
provide its employees to comply with the Affordable Care Act?
2. 1095-B
E1-5A. Addison Roy is a payroll accountant who works for a private firm. The most recent
professional development course in 2010. Which of the following ethical issues has been
violated?
3. Professional competence and due care
E1-6A. Max Anson owns Uninix Computers, a company with five employees. As a small
business owner, there are several options for payroll processing. What factors should be
considered when deciding on which payroll processing option is best for Uninix Computers?
(Select all that apply.)
3. The amount of money he has to spend on payroll processing.
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, SM 7-10
4. The computer technology used by the business
MATCH THE FOLLOWING TERMS WITH THEIR DEFINITIONS:
Question Answer
E1-7A: Manual payroll h. Payroll administration using a paper payroll
register
E1-8A: Timecard e. A record of the time worked during a
period for an individual employee
E1-9A: Paycard a. A pre-loaded credit card is used to pay
employees
E1-10A: Employee Internet portal c. A web-based application wherein
employees can modify certain payroll-related
information
E1-11A: Certified Payroll k. A way for governmental agencies to track
the payroll associated with a government
contract
E1-12A: Outsourced payroll i. The use of an external company to track
time and benefits and pay employees
E1-13A: Auditor j. A person or group who examines a
company’s accounting records for accuracy
E1-14A: ADP and Paychex® f. Examples of companies used for
outsourcing payroll processing
E1-15A: Time collection The process of gathering information about
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