Question

Mobile Sales has five sales employees which receive weekly paychecks. Each earns $11.50 per hour and each has worked 40 hours in the pay period. Each employee pays 12% of gross in federal income tax, 3% of gross in state income tax, 6% of gross in social security tax, 1.5% of gross in Medicare tax, and 0.5% of gross in state disability insurance.Journalize the recognition of the pay period ending January 19th which will be paid to the employees January 26th. (Keep in mind that none of the employees is subject to a ceiling amount for social security.) For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0". If required, round your answers to two decimal places.

Answer 1

Answer:

 $1,771

Explanation:

Federal income tax = Gross pay × 12% = $2,300 × 12% = $276

State income tax = Gross pay × 3% = $2,300 × 3% = $69

Social security tax = Gross pay × 6% = $2,300 × 6% = $138

Medicare tax = Gross pay × 1.5% = $2,300 × 1.5% = $34.50

Disability insurance = Gross pay × 0.5% = $2,300 × 0.5% = $11.50

Gross pay = Hourly pay × Number of hours × Number of employees

                = $11.50 × 40 × 5

                = $2,300

Net pay = Gross pay – All deduction

           = $2,300 – (276 + 69 + 138 + 34.50 + 11.50)

           = $1,771

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