Assessment 1 Part 3: Computing Payroll Earnings Scenario: G. Smith of Central Ma

Question

Assessment 1 Part 3: Computing Payroll Earnings Scenario: G. Smith of Central Manufacturing Company is paid at the rate of $30 an hour for an eight hour day, with time and and a half for overtime and double time for Sundays and holidays. Regular employment is on the basis of 40 hours a week, five days a week. At the end of the week, the labor time record shows the following: Job or Indirect Labor Su M Tu W Th F Sa Total 007 6 3 2 7 7 25 009 2 5 6 3 6 22 Machine Repair 5 8 13 Total 5 8 8 8 10 13 8 60 Using the data above and the ledger below, compute Smith's total earnings for the week and a prepare the journal entry to distribute Smith's total earnings. Hours x Rate = Total Account Debited Factory Overhead Expense Regular Time and Double Regular Time and Double Gross Work In Overtime M & R a half Time a half Time Earnings Process Premium Sunday indirect 5 Monday direct 8 Tuesday direct 8 Wednesday direct 8 Thursday direct 8 2 Friday direct 8 5 Saturday indirect 8 Totals 40 15 5 Assessment 1 Part 3: Computing Payroll Earnings Scenario: G. Smith of Central Manufacturing Company is paid at the rate of $30 an hour for an eight hour day, with time and and a half for overtime and double time for Sundays and holidays. Regular employment is on the basis of 40 hours a week, five days a week. At the end of the week, the labor time record shows the following: Job or Indirect Labor Su M Tu W Th F Sa Total 007 6 3 2 7 7 25 009 2 5 6 3 6 22 Machine Repair 5 8 13 Total 5 8 8 8 10 13 8 60 Using the data above and the ledger below, compute Smith's total earnings for the week and a prepare the journal entry to distribute Smith's total earnings. Hours x Rate = Total Account Debited Factory Overhead Expense Regular Time and Double Regular Time and Double Gross Work In Overtime M & R a half Time a half Time Earnings Process Premium Sunday indirect 5 Monday direct 8 Tuesday direct 8 Wednesday direct 8 Thursday direct 8 2 Friday direct 8 5 Saturday indirect 8 Totals 40 15 5

Explanation / Answer

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We first need to determine the value of WIP and factory overheads, in order to make journal entries.

Work in Process = Gross Earnings - Indirect Earnings = 2,175 - (300 + 360) = $1,515

Factory Overhead = Sunday Indirect + Saturday Indirect = 300 + 360 = $660

Now, we can prepare the journal entry as below:

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Notes:

Since Saturday is not considered to be a holiday, overtime is calculated at 1.5 times of the normal rate.

Hours Rate = Total Regular Time and Half Double Time Regular Time and Half Double Time Gross Earnings Sunday Indirect 0 0 5 0 0 60 300 Monday Direct 8 0 0 30 0 0 240 Tuesday Direct 8 0 0 30 0 0 240 Wednesday Direct 8 0 0 30 0 0 240 Thursday Direct 8 2 0 30 45 0 330 Friday Direct 8 5 0 30 45 0 465 Saturday Indirect 0 8 0 0 45 0 360 Totals 40 15 5 $2,175

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