Chapter 4

Answer Key
TRUE OR FALSE

1. F
2. T
3. T
4. F
5. F
6. T
7. T
8. T
9. T
10. T
11. T
12. F
13. T
14. F
15. F
16. T
17. F
18. T
19. T
20. F
21. T
22. T
23. T
24. T
25. T
26. F
27. T
28. F
29. T
30. T
31. T
32. T
33. F
34. T
35. F
36. F
37. T
38. F
39. T
40. T
41. T
42. T
43. T
44. F
45. T
46. T
47. T
48. T
49. F
50. T
51.

Multiple Choice
1. A

2. D

3. B
4. D

5. B

6. D
7. A

8. C
9. A

10. B

11. B
12. C

13. D

14. A
15. C

16. D
17. B

18. D

19. D
20. D

21. A

22. B
23. D

24. D
25. B

26. D

27. B
28. A

29. C

30. B
31. B

32. B
 33. C

34. C
35. B

36. D
37. D/A

38. A/A/C

39. B/C/A
40. A/A/C

41. B

42. A
43. B/D/B/A

44. A/C
45. D/C/B/C

46. B/C/C

47. B

Straight Problems
Problem 1

Solution

a. Gross Pay (120 hours x P50) 6,000

Less: Taxes and deductions 20% x (6,000 - 1,000) 1,000
b. Net Pay 5,000

Problem 2

A.

SSS Contribution
Employees Employer Share Employee Share Total
Mark 1,600 800 2,400
Joan 1,200 600 1,800
Irene 1,600 800 2,400
Earl 1,600 800 2,400
Marie 1,280 640 1,920
Total 7,280 3,640 10,920
Pag-Ibig Contribution
Employees Monthly Gross Earnings Employer Share Employee Share
Mark 35,000 700 700
Joan 15,000 300 300
Irene 20,000 400 400
Earl 25,000 500 500
Marie 16,000 320 320
Total 111,000 2,220 2,220

Philhealth
Contribution
Employees Monthly Gross Earnings Monthly Premium Employer Share Employee Share
Mark 35,000 962.50 481.25 481.25
Joan 15,000 412.50 206.25 206.25
Irene 20,000 550.00 275.00 275.00
Earl 25,000 687.50 343.75 343.75
Marie 16,000 440.00 220.00 220.00
Total 111,000 3,052.50 1,526.25 1,526.25

Mark Irene
Gross Earnings 35,000.00 Gross Earnings 20,000.00
Less: SSS Contribution 800.00 Less: SSS Contribution 800.00
Pag-Ibig Contribution 700.00 Pag-Ibig Contribution 400.00
Philhealth
Philhealth contribution 481.25 contribution 275.00
Taxable Income 33,018.75 Taxable Income 18,525.00

Joan Earl
Gross Earnings 15,000.00 Gross Earnings 25,000.00
Less: SSS Contribution 600.00 Less: SSS Contribution 800.00
Pag-Ibig Contribution 300.00 Pag-Ibig Contribution 500.00
Philhealth
Philhealth contribution 206.25 contribution 343.75
Taxable Income 13,893.75 Taxable Income 23,356.25

Marie
Gross Earnings 16,000.00
Less: SSS Contribution 640.00
Pag-Ibig Contribution 320.00
Philhealth contribution 220.00
Taxable Income 14,820.00
 WTAX
Mark
First 20,833 0
Excess (33,018.75 - 20,833)x 20% 2437.15
WTAX 2437.15

Joan 0

Irene 0

Earl
First 20,833 0
Excess (23,356.25 - 20,833) x 20% 504.65
WTAX 504.65

Marie 0

B. Journal Entries

1. To record payroll and employee’s contribution

Payroll 111,000.00
WTAX Payable 2,941.80
SSS Premium Payable 3.640.00
Philhealth Premium Payable 3.052.50
PAG-IBIG Premium Payable 2,220.00
Accrued Payroll 99,145.70
To record payroll for the month of August

2. To record the distribution of payroll

Work in Process 31,000
Factory Overhead Control 20,000
Administrative Expenses 35,000
Selling Expenses 25,000
Payroll 111,000
To record the labor distribution

3. To record employer’s contributions

Factory Overhead Control 5.801.25
Administrative Expenses 2,781.25
Selling Expenses 2,443.75
SSS Contribution Payable 7,280
Philhealth Contribution Payable 1,526.25
PAG-IBIG Contribution Payable 2,220
To record employer’s contributions
Problem 3

Answer
1. To record payroll

Payroll 16,260
WTAX Payable 813.00
SSS Premium Payable 487.80
Philhealth Premium Payable 162.60
PAG-IBIG Premium Payable 162.60
Accrued Payroll 14,634
To record payroll for the month of August
2. To record labor distribution
Work in Process 7,010
Factory Overhead Control 3,565
Administrative and Selling Expenses 5,685
Payroll 16,260
To record the labor distribution

Note: factory overhead control is equal to (2,640 indirect labor plus OT of laborer and factory supervisor
125+ 260+ 180+ 360)

Problem 4

Answer:
Regular hours (40 x 150) 6,000.00
Overtime hours (5 x 150) 750.00
Overtime Premium (5 x P150 x 50%) 375.00
Total gross pay 7,125.00

1. Charged to Specific job

Work in Process 7,125
Payroll 7,125

2. Not charged to Specific job

Work in Process 6,750
Factory Overhead Control 375
Payroll 7,125

Problem 5

(A x 2 x B) (D - E) (F x 50% x A) (D x A)
A B C D E F G H (H + G + C)
Employee Monday -
Hourly
Name Sunday Sunday Saturday Regular Overtime Regular Total Gross
Rate
Hours Pay hours hours Excess Premium Pay Earnings
Brian 900 6 10,800 48 40 8 3,600 43,200 57,600
Chris 950 - - 49 40 9 4,275 46,550 50,825
Regie 750 1 1,500 52 40 12 4,500 39,000 45,000
Tom 900 5 9,000 51 40 11 4,950 45,900 59,850
Jack 1,000 9 18,000 47 40 7 3,500 47,000 68,500
281,775
Problem 6

Answer:
Bonus (18,000 / 11.5 mos) 1,565
Vacation leave incentive (18,000 x 1/2) / 11.5 mos 783
Pension (4,000 / 12 mos) 333
Total fringe benefits liability 2,681

1. To record labor cost

Payroll 18,000
Accrued Payroll 18,000

2. To record labor distribution

Work in Process 18,000
Payroll 18,000

3. To record fringe benefits liability

Factory Overhead Control 2,681
Estimated Liability for bonus 1,565
Estimated Liability for vacation 783
Estimated Liability for pension 333

Problem 7

Answer:
1. To record labor incurrence

Payroll 1,000,000
SSS Premium Payable 20,000
Philhealth Premium Payable 10,000
Pag-ibig Premium Payable 10,000
Withholding taxes Payable 100,000
Accrued Payroll 860,000

2. To record labor distribution

Work in Process 500,000
Factory Overhead Control 200,000
Administrative Salary 250,000
Sales Salary 50,000
Payroll 1,000,000

3. To record employer’s contribution

Factory Overhead Control (70%) 42,000
Administrative Expenses (25%) 15,000
Sales Expenses (5%) 3,000
SSS Contribution payable 40,000
Philhealth Contribution payable 10,000
Pag-ibig Contribution payable 10,000

4. To record Payment of accrued payroll

Accrued Payroll 860,000

Cash in Bank 860,000
Problem 8

Answer:
1. To record labor incurrence

Payroll 8,500,000
SSS Premium Payable 425,000
Philhealth Premium Payable 85,000
Pag-ibig Premium Payable 85,000
Withholding taxes Payable 2,125,000
Accrued Payroll 5,780,000

2. To record labor distribution

Work in Process 8,500,000
Payroll 8,500,000

3. To record payment of accrued payroll

Accrued Payroll 5,780,000
Cash in Bank 5,780,000

Problem 9

Answer:
Over time
hours
Employee (hourly rate x excluding Overtime Sunday
Hourly Rate
Name total hours) Sundays premium Premium
Total Hours Regular
worked Earnings
A 200 48 9,600 8 800 -
B 250 52 13,000 9 1,125 750
C 200 56 11,200 12 1,200 800
D 300 51 15,300 11 1,650 -
X 175 50 8,750 7 613 525
57,850 5,388 2,075

8% 2% 2% 25%
Employee
Name Regular Overtime Sunday Gross
Earnings premium Premium Earnings SSS Philhealth Pag-ibig WTAX Net Pay
A 9,600 800 - 10,400 832 208 208.00 2,600.00 6,552.00
B 13,000 1,125 750 14,875 1,190 297.75 297.50 3,718.75 9,371.25
C 11,200 1,200 800 13,200 1,056 264 264.00 3,300.00 8,316.00
D 15,300 1,650 - 16,950 1,356 339 339.00 4,237.50 10,678.50
X 8,750 613 525 9,888 791 197.75 197.75 2,471.88 6,229.13
Total 57,850 5,388 2,075 65,313 5,225 1,306.25 1,306.25 16,328.13 41,146.88
Journal Entry

Payroll 65,313
SSS Premium Payable 5,225.00
Philhealth Premium Payable 1,306.25
Pag-ibig Premium Payable 1,306.25
WTAX Payable 16,328.13
Accrued Payroll 41,146.88

Problem 10

Answer

Abnormal
Normal Idle Time Total Idle Time Total
Mr. Sy Factory Supervisor 6 2,400 2 800
Mr. Yee Factory laborer 8 2,000 2 500
Mr. Ty Factory laborer 8 2,000 2 500
6,400 1,800
Journal Entry

FOH Control 2,400

Work in Process 4,000
Expenses 1,800
Payroll 8,200

The normal idle time of factory supervisor is charged to FOH while the normal idle time of factory worker
is charged to WIP.