Liam Wallace is general manager of moonwalk salons. during 2016 while this works for the company all year at a $13600 monthly sa
lary he also earned a year end bonus = 15% of his annual salary. Wallace's federal income tax withheld during 2016 was $952 per month plus $3672 on his bonus check. state income tax withheld came to a $150 per month plus $90 on bonuses. FICA tax was withheld on annual earnings. Wallace authorized the following payroll deductions charity fund contribution of 3% of total earnings and life insurance of $50 per month.
1. Compute Wallace's gross pay, payroll deductions, and net pay for the full year 2016. Round all amounts to the nearest dollar
2. Compute Moonwalk's total 2016 payroll expense for Wallace
3. Make the journal entry to record Moonwalk's expense for Wallace's total earnings for the year, his payroll deductions, and net pay. Debit Salaries Expense and Bonus Expense as appropriate. Credit liability accounts for the payroll deductions and Cash for net pay. An explanation is not required
4. Make the journal entry to record the accrual of Moonwalk's payroll tax expense for Wallace's total earnings.
1. Compute Wallace's gross pay, payroll deductions, and net pay for the full year 2016. Round all amounts to the nearest dollar
2. Compute Moonwalk's total 2016 payroll expense for Wallace
3. Make the journal entry to record Moonwalk's expense for Wallace's total earnings for the year, his payroll deductions, and net pay. Debit Salaries Expense and Bonus Expense as appropriate. Credit liability accounts for the payroll deductions and Cash for net pay. An explanation is not required
4. Make the journal entry to record the accrual of Moonwalk's payroll tax expense for Wallace's total earnings.
1 answer:
Answer:
1. Gross Pay = Salary + Bonus
= (13,600 * 12) + (15% * (13,600 * 12))
= 163,200 + 24,480
= $187,680
2.Wallace 2016 Payroll = Gross Pay - Deductions
Deductions
= FICA-Social security tax + FICA-Medicare tax + Federal income tax + State income tax + Charity Fund contribution + Life insurance contribution
= (6.2% x 117,000) + (1.45% x 187,680) + {(952 x 12) + 3,672} + {(150 x 12) + 90} + (3% x 187,680) + (50 x 12)
= 7,254 + 2,721.36 + 15,096 + 1,890 + 5,630.40 + 600
= $33,191.76
Wallace 2016 Payroll = 187,680 - 33,191.76
= $154,488.24
3.
DR Salaries Expense 163,200
Bonus Expense 24,480
CR FICA-Social Security Tax Payable 7,254
FICA- Medicare Tax Payable 2,721.36
Federal Income tax payable 15,096
State Income tax payable 1,890
Charity Fund Payable 5,630.90
Life Insurance Payable 600
Cash 154,488.24
4. Moonwalk's payroll tax expense for Wallace's total earnings.
DR Payroll Tax Expense 10,395.36
CR FICA-Social Security Tax Payable 7,254
FICA- Medicare Tax Payable 2,721.36
FUTA Payable (0.6% * 7,000) 42
SUTA Payable ( 5.4% * 7,000) 378
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