Under the state law, company may pay 3% of eligible gross wages or it may reimburse the state directly for actual unemployment claimes. The entity believes that actual unemployment claims will be 2% of eligible gross wages and has choses to reimburse the state. Eligible gross wages are defined as the first 100,000 of gross wages paid to each employee. The entity had 5 employees, each of whom earned P200,000 during the current year.  What amount shall be reported as liability for unemployment claims?  a.    10,000 b.    15,000 c.    20,000

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A:

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Payroll Entries

Payroll is a comprehensive record of employees that are paid by the company. Payroll classifies employees into various categories according to their function and pays scale (basic wage, allowance, income tax, other taxes, employee loans, etc.). Payroll processes form the bedrock of every organization as it contains sensitive information on the ‘wage and paycheck’ portion of the company’s strength—its employees. The organization needs to keep a track of the employees currently on the payroll, the net payout for the company, the record of transactions related to the employees including deductions and payroll taxes to identify the liability and its effect on the balance sheet (and other financial statements). Payroll records also include qualitative factors such as the conduct of the employee.