Payroll-Related Expenses
Shown Below Is a Summary of the Annual

question 90

Essay

Payroll-related expenses
Shown below is a summary of the annual payroll data of Revere Ironworks:
(d) How were the costs of postretirement benefits determined? Which of these amounts results in a liability to Revere Ironworks, and when will this liability be paid? Will the amount of the payments be more or less than the amount now shown as a liability? Explain.
$$\begin{array} { | l | r | r | } \hline \text { Wages and salaried expense (gross pay) } & & \$ 1,225,000 \\\hline \text { Amounts withheld form employee's pay: } & & \\\hline \text { Income taxes } & \$ 65,000 & \\\hline \text { Social Security and Medicare } & 50,000 & 115,000 \\\hline \text { Payroll taxes expense: } & & \\\hline \text { Social Security and Medicare } & \$ 50,000 & \\\hline \text { Unemployment taxes } & 12,000 & 62,000 \\\hline \text { Workers' compensation premiums } & & 45,000 \\\hline \text { Group health insurance premiums (paid by employer) } & & 106,000 \\\hline \begin{array} { l } \text { Contributions to employees pension plan (paid by } \\\text { employer and fully funded) }\end{array} & & 45,000 \\\hline \text { Cost of other postretirement benefits: } & & \\\hline \text { Funded } & \$ 20,000 & \\\hline \text { Unfunded } & 35,000 & 55,000 \\\hline & & \\\hline\end{array}$$ (a) Compute Revere's total payroll-related expense for the year.
$\$$ ___________
(b) Compute the company's cash outlays during the year for payroll-related expenses (assume short-term obligations such as insurance premiums and payroll taxes have been paid.)
$\$$ __________
(c) Compute the annual take-home pay of Revere's employees.
$\$$ __________

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Definitions:

Investment Account

A financial account held at a financial institution that contains securities, cash, and other assets, typically used for investing purposes.

Equity Method

An accounting technique used when a company holds a significant but not controlling investment in another company, recognizing its share of the investee's profits and losses.

Cash Flow Statement

A financial statement that shows the cash inflows and outflows for a company over a period, including operating, investing, and financing activities.

Investing Activities

Transactions related to buying or selling long-term assets and investments other than cash equivalents.