The payroll of Austin Corp. for September 2011 is as follows

The payroll of Austin Corp. for September 2011 is as follows: Total payroll was $485,000. Pensionable (CPP) and insurable (EI) earnings were $365,000. Income taxes in the amount of $85,000 were withheld, as were $8,000 in union dues. The employment insurance tax rate was 1.73% for employees and 2.42% for employers and the CPP rate was 4.95% for employees and 4.95% for employers.

Instructions 

(a) Prepare the necessary journal entries to record the payroll if the wages and salaries paid and the employer payroll taxes are recorded separately.

(b) Prepare the entries to record the payment of all required amounts to the CRA and to the employees' union.

(c) For every dollar of wages and salaries that Austin commits to pay, what is the actual payroll cost to the company?

(d) Discuss any other costs, direct or indirect, that you think would add to the company's costs of having employees.

(a)	Wages and Salaries Expense.....................................	485,000
Employee Income Tax Deductions                         Payable..............................................................			85,000
EI Premiums Payable*.........................................			6,315
CPP Contributions Payable**.............................			18,068
Union Dues Payable............................................			8,000
Cash........................................................................			367,617
*$365,000 X 1.73% = $6,315
**$365,000 X 4.95% = $18,068

Payroll Tax Expense....................................................	26,901
EI Premiums Payable...........................................		8,833
$365,000 X 2.42%
CPP Contributions Payable................................		18,068
(See previous calculation)

(b)	Employee Income Tax Deductions      Payable...............................................................................	85,000
EI Premiums Payable ($6,315 + $8,833)...........................		15,148
CPP Contributions Payable................................................		36,136
($18,068 + $18,068)
Cash.................................................................................			136,284

Union Dues Payable...................................................	8,000
Cash........................................................................		8,000

(c)        Wages for September 2011                                                              $485,000

  Payroll tax expense                                                                                26,901

  Total payroll cost for September 20011                                          $511,901

  Cost per dollar of wages = ($511,901 ¸ $485,000) = $1.055

(d)         The company may have additional employee-related costs such as WSIB, Health taxes, health and disability insurance, pension benefits, compensated absences (paid vacation, maternity/paternity leave, sick pay) and indirect costs such as a human resources department.