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

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 3

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 4

(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 -
Name Hourly
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 5

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 6

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 7

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 8

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 Overtim
Name e Sunday Gross
Regular premiu Premiu Earning Philhealt Pag-
Earnings m m s SSS h ibig WTAX Net Pay
A 9,600 800 - 10,400 832 208 208.00 2,600.00 6,552.00
1,19
B 13,000 1,125 750 14,875 0 297.75 297.50 3,718.75 9,371.25
1,05
C 11,200 1,200 800 13,200 6 264 264.00 3,300.00 8,316.00
1,35 10,678.5
D 15,300 1,650 - 16,950 6 339 339.00 4,237.50 0
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 5,22 1,306.2 1,306.2 16,328.1 41,146.8
 5 5 5 3 8

Journal Entry

Payroll 65,313
SSS Premium Payable 5,225.00
Philhealth Premium Payable 1,306.25
Pag-ibig Premium Payable 1,306.25
16,328.1
WTAX Payable 3
41,146.8
Accrued Payroll 8

Problem 9

Answer

Normal Idle Abnormal

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.

Problem 10

Problem 11

Problem 12
Problem 13

Problem 14

Problem 15

Problem 16

Problem 17

Problem 18

Problem 19

Problem 20

Problem 21

Problem 22

Problem 23

Problem 24

Problem 25

Problem 26

Problem 27

Problem 28

Problem 29

Problem 30

Problem 31