SOLUTION MANUAL
Payroll Accounting 2025, 34th Edition
by Bernard J. Bieg, Bridget Stomberg, Chapters 1 - 7
, CONTENTS
➢ Chapter 1: The Need for Payroll and Personnel Records
➢ Chapter 2: Computing Wages and Salaries
➢ Chapter 3: Social Security Taxes
➢ Chapter 4: Income Tax Withholding
➢ Chapter 5: Unemployment Compensation Taxes
➢ Chapter 6: Analyzing and Journalizing Payroll
➢ Chapter 7: Payroll Project
,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.
,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 youiimaintain 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 matterin more depth. The
laws that apply to this situation are the Privacy Act of 1974, U.S. Departmentof
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 onlinepersonnel 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 theycan reliably
handle the volume of payroll needs in a timely and accurate manner.
What Is the Difference?
, 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 smallfirms.
b. Computerized payroll systems can be used by any company, regardless of
size. Examplesof 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’siipayroll data, issue employee compensation, and prepare
tax forms.
d. Certified payroll pertains to companies with employees who work on
federal governmentiicontracts. Certified payroll ensures that a company
reports payroll expenditures of contractually allocated money.
ANSWERS TO END-OF-CHAPTER
MATERIALSiiREVIEW 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 alsoiiserves 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 wouldbe less likely to be required to have automated
payroll systems.
, 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 foremployee 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 someiiof the pitfalls?
a. An advantage of allowing individuals to self-manage their payroll
records would bethe 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 agovernment auditor?
Payroll Accounting 2025, 34th Edition
by Bernard J. Bieg, Bridget Stomberg, Chapters 1 - 7
, CONTENTS
➢ Chapter 1: The Need for Payroll and Personnel Records
➢ Chapter 2: Computing Wages and Salaries
➢ Chapter 3: Social Security Taxes
➢ Chapter 4: Income Tax Withholding
➢ Chapter 5: Unemployment Compensation Taxes
➢ Chapter 6: Analyzing and Journalizing Payroll
➢ Chapter 7: Payroll Project
,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.
,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 youiimaintain 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 matterin more depth. The
laws that apply to this situation are the Privacy Act of 1974, U.S. Departmentof
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 onlinepersonnel 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 theycan reliably
handle the volume of payroll needs in a timely and accurate manner.
What Is the Difference?
, 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 smallfirms.
b. Computerized payroll systems can be used by any company, regardless of
size. Examplesof 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’siipayroll data, issue employee compensation, and prepare
tax forms.
d. Certified payroll pertains to companies with employees who work on
federal governmentiicontracts. Certified payroll ensures that a company
reports payroll expenditures of contractually allocated money.
ANSWERS TO END-OF-CHAPTER
MATERIALSiiREVIEW 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 alsoiiserves 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 wouldbe less likely to be required to have automated
payroll systems.
, 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 foremployee 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 someiiof the pitfalls?
a. An advantage of allowing individuals to self-manage their payroll
records would bethe 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 agovernment auditor?
