Ch 14 HR/Payroll Process homework

1. Study context diagram Figure 14.6 and answer the following questions: 1) which external entities are connected with HR/Payroll
process? What inputs do they provide and what outputs do they receive?

Government agencies, banks, insurance companies, departmental managers and supervisors

Inputs: attendance records, job time records, current tax rates

Outputs: payroll contribution notice, tax deposit, payroll transfer check, payroll tax reports

2. Study logical DFD Figure 14.7 and answer the following questions: 1)what are the steps in HR/Payroll process? 2) what master data files
are updated in each step?
1. Perform data maintenance – tax rates data
2. Reconcile hours worked
3. Distribute labor costs – employee payroll master data
4. Pay employees – employee/payroll master data
5. Accrue liabilities
6. Prepare payments and deposits
7. Prepare payroll tax reports

3. What are attendance time records and job time records? What is the difference between the two?

Attendance time records show the time periods employees are in attendance at the job site

Job time records reflect stop and start times on specific jobs

The difference is that job time records shows the actual time they worked whereas attendance just shows they were there and available for
work.
 Study the Journal entries in Exhibit 14.1. Both employees and employers pay taxes. Employers withhold tax on behalf of employees. Try to
write down payroll journal entries for our Mary’s Pool case. See information on payroll below.

APPENDIX F
REPORT FROM PPP FOR 7/31 PAYROLL
Payroll checks created:

Name Gross Salary Federal Social State Medical Retirement Charitable Net Pay
Security Income Insurance
Income Contribs
(FICA) Tax
Tax

Lauren Allen 1500 225 90 75 57.32 300 25 $ 727.68

Paul Barton 1800 396 108 90 57.32 500 25 $623.68

Ernest Callahan 1800 396 108 90 57.32 300 $848.68

Ted Hill 800 56 48 40 57.32 $ 598.68

Fred Hill 800 56 48 40 57.32 $ 598.68

0 0 0 0 0 0 0 0

Payroll Clearing $5263.40 Accrued Payroll $3397.40

FIT withholdings payable $1129 Cash $3397.40
SIT withholdings payable $335
FICA Tax withholdings payable $402
Accrued Payroll $3397.40
Employer contributions and payroll taxes remitted:

Name Social Medical Retirement FUTA SUTA Total

Security Insurance

(FICA)

Lauren Allen 90 57.32 300 0

Paul Barton 108 57.32 500 0

Ernest Callahan 108 57.32 300 0

Ted Hill 48 57.32 0 6.4 21.6 0

Fred Hill 48 57.32 0 6.4 21.6 0

0 0 0 0 0 0

FICA $402
SUT $43.20
FUTA $12.80
Cash $458
4. What are the three control goals of operation effectiveness for HR/Payroll process?.
1. Provide employees with timiely paychecks
2. Provide timely filing of tax returns and other reports to government agencies
3. Comply with the requirements of payroll tax laws and regulations

5. What is payroll clearing account?

It’s a zero balance account that companies use to record and monitor their payrolls. Once checks clear, there are no funds in this
account.

6. What is imprest payroll account ?

A separate account held by a corporation that contains funds strictly for employee payroll use.

7. Complete the following control tables to study application controls in HR/Payroll. See Figure 12/13 for solutions.
 Operations Information Systems

Effectiveness Efficiency Resources

Control Plans: What is it? A B C IV IC IA UC UA

Approve attendance time Dept supervisor should x X

data approve attendance entry

Approve job time data Dept supervisor should X x

approve time worked entry

Reconcile attendance and Makes sure time is recorded x x x x X

job time data appropriately to pay
employee for correct total of
hours

Distribute labor costs Time sheets collected and x x x x X

using payroll clearing gross pay is calculated, a
account payroll clearing account in
the GL is debited for the
gross pay amount and as job
time is analyzed the clearing
acct is credited for the gross
pay distributed.

Independent paycheck Periodically, paychecks X x

distribution (Direct should be distributed by
deposit) someone other than the
supervisor of an employee to
ensure that everyone being
paid is actually a working
employee

Approve payroll transfer Only applies when a x x

check company uses an imprest
payroll bank account.
Disbursement vouchers are
 Operations Information Systems

Effectiveness Efficiency Resources

Control Plans: What is it? A B C IV IC IA UC UA

approved and disursed by the

cashier

Use an imprest payroll A separate account held by a x X x x

bank account corporaton that contains
funds strictly for employee
payroll use.