Which of the following controls would be most effective in detecting this problem prior to distributing the paychecks?
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Choose only one answer as well as state their reasons/rationale for the answer chosen.
1) An employee who is paid a salary of $50,000 submitted a request to deduct $50 per paycheck in voluntary deductions to a pension plan. The next weekly paycheck was for a net amount of $50. The employee was furious. Which of the following controls would be most effective in detecting this problem prior to distributing the paychecks?
a. Financial total
b. Size check
c. Limit check
d. Reasonableness test
e. Record count
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Solved in 2 steps
- Grace ked Company has a defined contribution pension scheme. However, during the year, it introduced a new post- employment plan name the Fund for its employees as a way of enhancing the benefits they will receive when they retire. Grace ked company makes monthly contributions into the Fund that are equal to a set percentage of the salary cost. Upon retirement, employees will receive annual payments from the Fund based on their number of years of service and their final salary. The Fund is voluntary and Grace Ked Company can cancel it at any point. Grace Ked Company has a history of paying employees benefits that are substantially above the national average, with annual increases in excess of inflation. Grace Ked Company has won many accolades as a “top employer” and received positive coverage from the national press when the Fund was announced. The leadership team are well trusted by the employees. Required: Advised Grace Ked Company on whether the FUND is a defined benefit plan or a…Villa Company has experienced tough competition, leading it to seek concessions from its employees in the company's pension plan. In exchange for promises to avoid layoffs and wage cuts, the employees agreed to receive lower pension benefits in the future. As a result, Villa amended its pension plan on January 1, 2020, and recorded negative past service cost of $125,000. Current service cost for 2020 is $26,000. Interest expense is $9,000, and interest revenue is $2,500. Actual return on assets in 2020 is $1,500. Compute Villa's pension expense in 2020.As part of a restructuring plan, Patagonia informs 100 of its employees that they will be laid off and given cash as part of a severance plan. No additional work is required of employees to receive the cash payment. Assuming Patagonia follows U.S. GAAP, Patagonia should record its obligation to make these payments: Group of answer choices After the employees are laid off Never since this is a restructuring plan Immediately after communicating the plan to employees When the cash payments are made
- Nerwin, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union, the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2020. Each employee covered by the plan is entitled to a pension payment each year after retirement. As required by accounting standards, the controller of the company needs to report the pension obligation (liability). On the basis of a discussion with the supervisor of the Personnel Department and an actuary from an insurance company, the controller develops the following information related to the pension plan. Average length of time to retirement 15 years Expected life duration after retirement 10 years Total pension payment expected each year after retirement for all employees. Payment made at the end of the year. $700,000 per year The interest rate to be used is 8%. Instructions On the basis of the information above,…Towson Company has experienced tough competition for its talented workforce, leading it to enhance the pension benefits provided to employees. As a result, Towson amended its pension plan on January 1, 2020, and granted past service costs of $250,000. Current service cost for 2020 is $52,000. Interest expense is $18,000, and interest revenue is $5,000. Actual return on assets in 2020 is $3,000. What is Towson's pension expense for 2020? a. $65,000. b. $302,000. c. $317,000. d. $315,000.Line 4 of the Form 940 is where items that are not included as FUTA wages are adjusted out. Which of the following is not an item that is backed out on line 4? a. Contributions paid by employer for health/accident plans for employees. b. Value of a group-term life insurance with a face value of $45,000. c. Wages over $7,000 per employee per year. d. Nondiscretionary bonuses.
- The trustee for the Bronson Corporation defined benefit pension plan sent a report to the CEO with the following information for the fiscal year: Beginning balance of plan assets at fair value $ 1,560,000 Actual return on plan assets $ 210,000 Employer’s contribution $ 150,000 Distributions to retirees $ 75,000 Service cost $ 125,000 Interest cost $ 156,000 Loss from changes in benefits or assumptions $ 35,000 Beginning balance of the PBO $ 1,580,000 The ending balance of plan assets is: Multiple Choice $1,770,000. $1,845,000. $1,920,000. $1,955,000.In the case where an employer is delinquent in paying contributions to the state for SUTA: a. experience ratings may be decreased. b. their employees may not be eligible to collect unemployment benefits. c. the employer may be required to contribute monthly rather than quarterly. d. a 100% penalty may be imposed.Your boss approaches you in mid-December and requests that you pay certain employees their gross pay amount as if there were no deductions as their year-end bonuses. None of the employees have reached the Social Security wage base for the year.Required:What is the gross-up amount for each of the following employees? (The tax rate on bonuses is 22 percent. The Social Security (6.2%) and Medicare taxes (1.45%) must be added to this rate.) (Round your intermediate calculations and final answers to 2 decimal places.) Employee Regular Gross Pay per Period Grossed-up Amount Yves St. John $1,575 Kim Johnson $2,560 Michael Hale $2,416
- Engr. Secula became a full professor when he was hired in a State university at the age of 34. Assuming that there is no salary increase, it is estimated that he will pay a total of ₱5,294,225.88 for his mandatory contribution to the Government Service Insurance System (GSIS) until his retirement at the age of 65. a) How much is his monthly salary, if the mandatory deduction in his monthly salary is only 9% for his GSIS contribution? Write your answer below, and show the complete solution in your solution sheet. b) Determine the future equivalent worth of his contributions when he retire if the government interest rate is maintained at 8%. Write your answer below, then show the Cash Flow diagram (with functional symbols) and complete solution in your solution sheet. c) If he lives 35 more years after retiring, what annual withdrawal can he expect from his contribution?Sparrow Corporation would like you to review its employee fringe benefits program with regard to the tax consequences of the plan for the company's president (Polly), who is also the majority shareholder. For the following items, indicate what amount, if any, is included in Polly's gross income. If an amount is zero, enter "0". a. The company has a qualified retirement plan. The company pays the cost of employees attending a retirement planning seminar. The employee must be within 10 years of retirement, and the cost of the seminar is $1,500 per attendee. $fill in the blank 1 b. The company owns a parking garage that is used by customers, employees, and the general public, but primarily by the employees. Only the general public is required to pay for parking. The charge to the general public for Polly's parking for the year would have been $3,600 (a $300 monthly rate). $fill in the blank 2 c. All employees are allowed to use the company's fixed charge long-distance telephone…A taxpayer spends well over $50 each month on public transit, and the taxpayer’s employer is implementing a new policy that gives each employee a $50 transit pass each month. However, to alleviate the cost of the new “perk”, the employer plans to reduce the employee’s pretax salary by $1,000. Assuming the taxpayer’s marginal tax rate is 35%, is the taxpayer better off under the new policy? Hint: Also incorporate into your calculation that nontaxable fringe benefits are not subject to FICA taxes whereas salary is. $50*12 = $600 after-tax $1000 * (1 – 35% - 7.65%) = $573.50 after-taxYes, the taxpayer/employee is better off. Where does 7.65% come from?? Is there anybody who can explain this?
