Tax Accounting - Essay Example

Tax Accounting Employee Employee Grade Annual Salary Performance Rating Bonus Target Sarah 11 58,000 3 8% Ben 12 80,000 110%Stephen1164,00018%Mary1278,000210%Jennifer1060,00038%a. Target + 1% accrual Sarah8% x 58,000 + 580= 5,220Ben10% x 80,000 + 800= 8,800Stephen8% x 64,000 + 640= 5,760Mary10% x 78,000 + 780= 8,580Jennifer8% x 60,000 + 600= 5,400 b. Actual payout Employee CalculationActual PayoutSalaryTotal Amount Sarah125% x 8% x 58,000 + 580=6,38058,00064,380Ben125% x 10% x 80,000 + 20% x 10,000 + 80012,00080,00092,800Stephen125% x 8% x 64,000 + 20% x 6400 + 6407,68064,00072,320Mary125% x 10% x 78,000 + 10% x 9750 + 78010,72578,00089,505Jennifer125% x 8% x 60,000 + 6006,00060,00066,600c.

Take Home Bonus Sarah(39% x 5,800) =22625,800- 2262 = 3538Ben(39% x 12,000) =4,68012,000- 4,680= 77320Stephen (39% x 7,680)= 2995.207680- 2995.20= 4,684.80Mary(39% x 10,725)= 4,182.7510,725- 4,182.74= 6,542.25Jennifer(39% x 6,000) = 2,3406,000- 2,340 = 3,660d. Email A target bonus of 8% + 1% accrual has been used to calculate the target accrual amount for the five employees. A 125% target payout announced by the company on the target bonus of each of the five employees is calculated as per the decision of the company to award the 125% annual bonus.

However, Sarah and Jennifer do not receive an additional amount on their bonus while Stephen and Ben receive a 20% additional amount on their bonus and Mary receives a 10% additional amount on her bonus. The difference between the total accrual and the total payout amount is the target 1255 annual bonus for each employee and an additional amount as a bonus that the employee receives depending on the performance rating given for the employee.