SOL. MAN. Chapter 5 Employee Benefits (PART 1) 2021 PDF

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Chapter 5Employee Benefits (Part 1)PROBLEM 1: TRUE OR FALSE1. TRUE2. TRUE3. TRUE4. FALSE – Both employee and employer will contribute so is for PhilHealth and Pag-IBIG. 5. TRUEPROBLEM 2: MULTIPLE CHOICE – THEORY1. D2. D3. C4. C5. D6. B7. A8. B9. A10PROBLEM 3: EXERCISES1. Solution:Emplo yeeStarting d...

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Chapter 5 Employee Benefits (Part 1) PROBLEM 1: TRUE OR FALSE 1. TRUE 2. TRUE 3. TRUE 4. FALSE – Both employee and employer will contribute – so is for PhilHealth and Pag-IBIG. 5. TRUE

PROBLEM 2: MULTIPLE CHOICE – THEORY 1. D 2. D 3. C 4. C 5. D 6. B 7. A 8. B 9. A 10. A

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PROBLEM 3: EXERCISES 1. Solution: Emplo yee S. Perkins M. Jordan P. Ford J. Worthy

Starting date

VL earned to date

VL Taken

VL Not taken

12

7

5

18* 2

3 0

15 2

5

1

4

1/6/2000 6/2/2001 11/4/2002 7/28/2002

* 12 during the year + 6 carry forward = 18

Employee

Vacation Days Not Taken

S. Perkins M. Jordan P. Ford J. Worthy

5 15 2 4

Liability for Rate per Day ₱70 60 48 9

Compensated Absences ₱ 350 900 96 316 ₱1,662

2. Solutions:

Requirement (a): Bonus before bonus and before tax B = P x Br B = 1,800,000 x 12% = 216,000

Requirement (b): Bonus after bonus and before tax P 1 + Br B = 1,800,000 – [1,800,000 ÷ (1 + 12%)] B = 192,857 B

= P -

Requirement (c): Bonus before bonus and after tax B

=

2

P x

1 – Tr 1/Br –

Tr B = 1,800,000 x {(1 - 30%) ÷ [(1÷12%) - 30%]} B = 156,846

Requirement (d): Bonus after bonus and after tax

B

= P x

1 - Tr 1/Br - Tr + 1

B = 1,800,000 x {(1 + 30%) ÷ [(1÷12%) - 30% + 1]} B = 139,483

3. Solution:

Bonus after bonus and after tax B

= P x

1 - Tr 1/Br - Tr + 1

44,000 = P x {(1 – 30%) ÷ [(1 ÷ 14%) – 30% + 1]} 44,000 = P x [(0.70) ÷ (7.14 – 0.30 + 1)] 44,000 = P x (0.70 ÷ 7.843) 44,000 = P x .089 P = 44,000 ÷ .089 P = 494,382

Note: The learner’s answer may NOT be exactly equal to the amount above because of ROUNDINGOFF. 4. Solution: Plan A: (8% Bonus based on profit after bonus but before taxes) Bonus after bonus and before tax B

= P -

B = 100,000 – [100,000 ÷ (1 + 8%)] B = 7,407

3

P 1 + Br

Plan B: (12% Bonus based on profit after bonus and taxes) Bonus after bonus and after tax B

= P x

1 - Tr 1/Br - Tr + 1

B = 100,000 x {(1 + 30%) ÷ [(1÷12%) - 30% + 1]} B = 7,749

Answer: The executives would prefer Plan B 5. Solution: 20x1 Retirement benefits expense Accrued retirement benefits 20x2 Retirement benefits expense Accrued retirement benefits Prepaid retirement benefits Cash

2,000,000 2,000,000

2,000,000 2,000,000 700,000 4,700,000

20x3 Retirement benefits expense Prepaid retirement benefits Cash Accrued retirement benefits 100,000

4

2,000,000 700,000 1,200,000

PROBLEM 4: MULTIPLE CHOICE – COMPUTATIONAL 1. C 5, 000 3, 750 8, 750 ( 525) ( 131)

Salary at regular rate (40 hrs. x 125) Salary at special rate [20 x (125 x 150%)] Gross pay SSS PhilHealth Pag-IBIG

(25) 8, 069 (1, 210) 6 ,858

Net pay before withholding tax Withholding tax Net pay after withholding tax

2. B Ryan: (800 x 2) = 1,600. None is accrued for Todd because his vacation rights neither vest nor accumulate. 3. D Vacation days available at year-end Multiply by: Average salary per day Adjusted liability for compensated absences

150 100 15,00 0

No liability is recognized for the sick days. These are expensed when actually taken. 4. D Bonus after bonus and after tax 1 – Tr 1/Br - Tr + 1 B = 400,000 x {(1 + 30%) ÷ [(1÷10%) - 30% + 1]} B = 26,168 B

= P x

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5. A – the agreed annual contribution to the fund.

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PROBLEM 5: FOR CLASSROOM DISCUSSION 1. Solutions: Requirement (a): 460, 000 20, 000 24, 173 6, 000 2, 000 512 ,173

Basic salaries Cost of living allowances (COLA) SSS contribution (employer's share) PhilHealth contribution (employer's share) Pag-IBIG (employer's share) Total salaries expense

Requirement (b): 460, 000 20, 000 (11, 626) (6, 000) (2, 000) (9, 112) 451 ,262

Basic salaries Cost of living allowances (COLA) SSS contribution (employee's share) PhilHealth contribution (employee's share) Pag-IBIG (employee's share) Withholding taxes on salaries “ Take-home” salaries of employees

Requirement (c): Debi t 512,1 73

Salaries expense SSS contribution payable (Ee’s sh. + Er’s sh.)

PhilHealth contribution payable (Ee’s sh. + Er’s sh.)

Pag-IBIG contribution payable (Ee’s sh. + Er’s sh.)

Withholding taxes payable

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Credit

35,799 12,000 4,000 9,112

451,26 2

Cash (Salaries payable) 2. Solution: YearSalaries expense end Accrued salaries payable

13,39 0

*Total sick leaves available in current year (20 ee's x 2 each) Sick leaves taken Excess carried over to future periods Multiply by: Future salary (500 x 103%) Accrued liability as of year-end

13,390 * 40 (14) 26 515 13,39 0

The vacation leaves are not accrued because they are non-accumulating and non-vesting. These are recognized when they are taken. 3. Solutions: Requirement (a): Bonus before bonus and before tax B = P x Br B = 200,000 x 2% = 4,000 Requirement (b): Bonus after bonus and before tax P B = P 1 + Br B = 200,000 – [200,000 ÷ (1 + 2%)] B = 3,922 Requirement (c): Bonus before bonus and after tax 1 – Tr B = P x 1/Br – Tr B = 200,000 x {(1 - 30%) ÷ [(1÷2%) - 30%]} B = 200,000 x (0.7 ÷ 49.7) = 2,817 Requirement (d): Bonus after bonus and after tax 1 - Tr B = P x 1/Br - Tr + 1 B = 200,000 x {(1 + 30%) ÷ [(1÷2%) - 30% + 1]}

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B = 200,000 x (0.7 ÷ 50.7) = 2,761 4. Solution: 20x1 Retirement benefits expense Prepaid retirement benefits Cash

1,000,000 200,000 1,200,000

20x2 Retirement benefits expense Prepaid retirement benefits Cash Accrued retirement benefits 20x3 Retirement benefits expense Accrued retirement benefits Cash

1,000,000 200,000 700,000 100,000

1,000,000 50,000 1,050,000

9...