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Memo of accounting - Essay Example

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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…
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Tax Accounting Employee Employee Grade Annual Salary Performance Rating Bonus Target Sarah 11 58,000 3 8% Ben 12 80,000 1
10%
Stephen
11
64,000
1
8%
Mary
12
78,000
2
10%
Jennifer
10
60,000
3
8%
a. Target + 1% accrual
Sarah
8% x 58,000 + 580= 5,220
Ben
10% x 80,000 + 800= 8,800
Stephen
8% x 64,000 + 640= 5,760
Mary
10% x 78,000 + 780= 8,580
Jennifer
8% x 60,000 + 600= 5,400
b. Actual payout
Employee
Calculation
Actual
Payout
Salary
Total Amount
Sarah
125% x 8% x 58,000 + 580=
6,380
58,000
64,380
Ben
125% x 10% x 80,000 + 20% x 10,000 + 800
12,000
80,000
92,800
Stephen
125% x 8% x 64,000 + 20% x 6400 + 640
7,680
64,000
72,320
Mary
125% x 10% x 78,000 + 10% x 9750 + 780
10,725
78,000
89,505
Jennifer
125% x 8% x 60,000 + 600
6,000
60,000
66,600
c. Take Home Bonus
Sarah
(39% x 5,800) =2262
5,800- 2262 = 3538
Ben
(39% x 12,000) =4,680
12,000- 4,680= 77320
Stephen
(39% x 7,680)= 2995.20
7680- 2995.20= 4,684.80
Mary
(39% x 10,725)= 4,182.75
10,725- 4,182.74= 6,542.25
Jennifer
(39% x 6,000) = 2,340
6,000- 2,340 = 3,660
d. Email
A target bonus of 8% + 1% accrual has been used to calculate the target accrual amount of 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 and 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. Read More
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