ATC 9-1 Business Applications Case Understanding Real-World Annual Reports
Required
Obtain the Target Corporation’s annual report at http://investors.target.com using the instructions in Appendix B, and use it to answer the following questions:
a. What was Target’s current ratio for its fiscal year ended January 28, 2017 (2016) and 2015?
b. Did the current ratio get stronger or weaker from 2015 to 2016? Explain briefly why this happened.
c. Target’s balance sheet reports “Accrued and other current liabilities.” What is included in this category? (See the notes to the financial statements.)
ATC 9-2 Group Assignment Accounting for Payroll
The following payroll information is available for three companies for Year 1. Each company has two employees. Assume that the Social Security tax rate is 6 percent on the first $110,000 of earnings and that the Medicare tax rate is 1.5 percent on all earnings.
Brooks Company
| Employee | Hourly Rate | Regular Hours | Overtime Rate | Overtime Hours |
|---|---|---|---|---|
| Employee No. 1 | $40 | 2,000 | $60 | 300 |
| Employee No. 2 | $20 | 2,000 | $30 | 100 |
Other benefits provided for the employees:
- Medical insurance $250 per month for each employee
- Pension benefits $100 per month for one employee
Federal income tax withheld is 15 percent of gross earnings for each employee. The state unemployment tax rate is 5.4 percent and the federal unemployment tax rate is 0.6 percent on the first $7,000 of earnings per employee.
Hill Company
| Employee | Weekly Rate | Weekly Hours Worked | Overtime Rate | Overtime Hours |
|---|---|---|---|---|
| Employee No. 1 | $2,000 | 52 | NA | NA |
| Employee No. 2 | $18/hr. | 2,000 | $27/hr. | 60 |
Other benefits provided for the employees:
- Medical and dental insurance $325 per month for each employee
- Pension benefits $150 per month for one employee and $100 per month for the other employee
Federal income tax withheld is 15 percent of gross earnings for each employee. The state unemployment tax rate is 5.4 percent and the federal unemployment tax rate is 0.6 percent on the first $7,000 of earnings per employee.
Valley Company
| Employee | Monthly Salary | Monthly Hours Worked | Overtime Rate | Overtime Hours |
|---|---|---|---|---|
| Employee No. 1 | $10,500 | 12 | NA | NA |
| Employee No. 2 | $20/hr. | 860 | NA | NA |
Other benefits provided for the employees:
- Medical and dental insurance $375 per month for only one employee
- Pension benefits 10% of gross salary for the full-time employee
Federal income tax withheld is 15 percent of gross earnings for each employee. The state unemployment tax rate is 5.4 percent and the federal unemployment tax rate is 0.6 percent on the first $7,000 of earnings per employee.
Required
a. Divide the class into groups of four or five students. Organize the groups into three sections. Assign each section of groups the payroll data for one of the above companies.
Group Tasks
(1) Determine the gross and net payroll for your company for the year.
(2) Determine the total compensation cost for your company for the year.
(3) Have a representative from each section put the compensation on the board broken down by salaries cost, payroll tax, and fringe benefit cost.
Class Discussion
b. Have the class discuss how the categories of compensation cost are similar and why some are more or less than those of the other companies.
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