• In 1990, Gary Erickson lived in a garage with his dog.
• In 2000, Clif Bar was nearly sold to Quaker Oats for $120 million—Erickson backed out of the deal when
he experienced panic attacks about the sale. The company has tripled in size since.
• Clif Bar currently has 230 employees and revenue of $150 million.
1. Earnings during the pay period, length of pay period, marital status, number of allowances.
3. Fair Labor Standards Act sets the minimum hourly rate of pay and maximum hours of work per week. It is
also referred to as the Wage and Hour Law.
5. Salaried employees who hold supervisory or managerial positions, not subject to maximum hours and
overtime.
7. No, levied on the employer only.
9. To provide medical care for the employee and the employee’s spouse after each has reached 65 years of
age.
11. Funds are automatically deposited in the employee’s account from the employer’s bank.
13. Withholding tables
15. One depends solely on the number of hours worked each week; the other is a fixed amount per month, per
week, or other pay period.
Note to instructor: These questions are designed to check students’ understanding of new concepts, and
procedures presented in the chapter.
Discussion Questions
Chapter Opener: Thinking Critically
PAYROLL COMPUTATIONS, RECORDS, AND PAYMENT
CHAPTER 10
Students might mention benefits like the company’s commitment to the environment and the appeal of a non-
traditional environment that boasts climbing walls and yoga classes.
Fast Facts
Managerial Implications: Thinking Critically
Answers will vary, but students may suggest payroll audits, monitoring of cards, and division of labor for
payroll tasks.
EXERCISE 10.1
EMPLOYEE
NO.
HOURLY
RATE
HOURS
WORKED
GROSS
EARNINGS
EXERCISE 10.2
HOURLY
RATE
OVERTIME
RATE
REGULAR
HOURS
WORKED
OVERTIME
HOURS
WORKED
REGULAR
PAY
OVERTIME
PAY
GROSS
PAY
EXERCISE 10.3
EMPLOYEE
NO.
DECEMBER
SALARY
YEAR TO DATE
EARNINGS
THROUGH
NOVEMBER 30
SOC. SEC.
TAXABLE
EARNINGS
DECEMBER
SOCIAL
SECURITY
TAX
6.20%
EXERCISE 10.4
MEDICARE
TAXABLE
EARNINGS-
DECEMBER
EMPLOYEE
NO.
DECEMBER
SALARY
MEDICARE
TAX 1.45%
EXERCISE 10.7
POST.
REF.
1 2013 1
2 July 31 30 5 5 8 46 2
38041543
20
Sales Salaries Expense
DEBIT CREDIT
GENERAL JOURNAL
Office Salaries Expense
DATE DESCRIPTION
PAGE
PROBLEM 10.1A
1.
HOURS
WORKED
48
Gross Pay $667.68
2. PAGE
2
POST.
REF.
1 2013 1
GENERAL JOURNAL 54
CREDITDATE DESCRIPTION DEBIT
$12.84
OVERTIME
EARNINGS
GROSS
EARNINGS
REGULAR
TIME
EARNINGS
REGULAR
HOURS,
HOURLY
RATE
EMPLOYEE
NO.
Kathy Burnett $667.68$154.08$513.60
PROBLEM 10.1A (continued)
Analyze: Kathy earned overtime pay of $1,960.48, calculated as follows:
Cumulative earnings, prior to December 31 payroll $28,000.00
PROBLEM 10.2A
PAYROLL REGISTER WEEK BEGINNING
Nelda Anderson 1 M 17 5 4 0 00 48 $11.75 4 7 0 00 1 4 1 04 6 1 1 04 18 1 5 1 04
NO. OF
HRS. RATE
EARNINGS
June 24, 2013
NAME
NO. OF
ALLOW.
MARITAL
STATUS
CUMULATIVE
EARNINGS
CUMULATIVE
EARNINGS
REGULAR
TIME
EARNINGS
OVERTIME
EARNINGS
GROSS
AMOUNT
PROBLEM 10.2A (continued)
AND ENDING PAID
CHECK
NO.
61 104 611 04 3788 886 4600 51830 61104
SOCIAL
SECURITY MEDICARE FUTA
SOCIAL
SECURITY MEDICARE
INCOME
TAX
NET
AMOUNT
WAGES
EXPENSE
June 30, 2013 July 3, 2013
TAXABLE WAGES DEDUCTIONS DISTRIBUTION
PROBLEM 10.2A (continued)
POST.
REF.
1 2013 1
2 June 30 2 1 4 8 35 2
313319 3
4 3 1 16 4
GENERAL JOURNAL
Social Security Tax Payable
Medicare Tax Payable
Wages Expense
15
DATE DESCRIPTION DEBIT CREDIT
PAGE
PROBLEM 10.3A
PAYROLL REGISTER WEEK BEGINNING
Gloria Bahamon 4 M 32 7 6 0 00 46 $15.75 6 3 0 00 1 4 1 78 7 7 1 78 33 5 3 1 78
CUMULATIVE
EARNINGS
REGULAR
TIME
EARNINGS
OVERTIME
EARNINGS
GROSS
AMOUNT
December 15, 2013
NAME
NO. OF
ALLOW.
MARITAL
STATUS
CUMULATIVE
EARNINGS
N
O. OF
HRS. RATE
EARNINGS
PROBLEM 10.3A (continued)
AND ENDING PAID
CHECK
NO.
77 178 77178 4785 1119 10300 60974 77178
TAXABLE WAGES DEDUCTIONS DISTRIBUTION
MEDICARE
INCOME
TAX
SOCIAL
SECURITY MEDICARE FUTA
SOCIAL
SECURITY
NET
AMOUNT
December 21, 2013 December 23, 2013
OFFICE
WAGES
DELIVERY
WAGES
PROBLEM 10.3A (continued)
POST.
REF.
1 2013 1
2 Dec. 21 1 2 8 1 78 2
32529303
423629 4
DATE DESCRIPTION DEBIT CREDIT
PAGE
GENERAL JOURNAL
Delivery Wages
32
Office Wages
Social Security Tax Payable
PROBLEM 10.4A
MONTHLY
PAY
PAGE
POST.
REF.
1 2013 1
2 Oct. 31 Salaries Expense 4000000 2
3 Social Security Tax Payable 3 1 0 00 3
4 Medicare Tax Payable 5 8 0 00 4
5 Employee Income Tax Payable 1062300 5
6 Salaries Payable 2848700 6
7 7
8 31 Salaries Payable 2848700 8
9 Cash 2848700 9
10 10
11 11
Analyze: An employee is hired by and works under the control and direction of the employer. An
independent contractor is paid by the company to carry out a specific task but is not
under the direct supervision or control of the company.
MEDICARE
SOCIAL
SECURITY
EMPLOYEE
NAME.
EMPLOYEE
INCOME TAX
WITHHOLDING
CUMULATIVE
EARNINGS
NET PAY
CREDITDATE DESCRIPTION DEBIT
GENERAL JOURNAL 22