Question

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Question 6 Selected data from a March payroll register for Sure Company are presented below. Some amounts are intentionally omitted Gross earnings Regular $24,000 State income taxes $(3) Overtime Union dues 200 Total (2) Total deductions Doductions: Net pay $23,540 FICA taxes $2,340 Accounts debited: Federal income taxes 2,000 Salarios/wages expense FICA taxes are 8% State income taxes are 4% of gross earnings. Instructions (a) Fill in the missing amounts. (b) Journalize the February payroll and the payment of the payroll.

Answer 1

a) FICA taxes = Gross earnings*8%

  Gross earnings = FICA taxes/8% = $2,340/8% = $29,250

1) Overtime pay = Total Earnings - Regular pay

= $29,250 - $24,000 = $5,250

2) Total Earnings = $29,250 (i.e. gross earnings)

3) State income taxes = Gross earnings*4%

= $29,250*4% = $1,170

4) Total deductions = FICA taxes+Federal Income Taxes+State Income taxes+Union Dues

= $2,340+$2,000+$1,170+$200 = $5,710

5) Salaries/Wages expense = $29,250 (debited by gross earnings)

b) Journal Entries for Payroll is shown as follows (Amounts in $)

No	Account Titles and Explanations	Debit	Credit
1)	Salaries/Wages Expense	29,250
	FICA taxes payable		2,340
	Federal Income tax withholdings payable		2,000
	State Income tax withholdings payable		1,170
	Union Dues Payable		200
	Net Payroll Payable		23,540
	(To record the February payroll)
2)	Net Payroll Payable	23,540
	Cash		23,540
	(To record the payroll paid in cash)
3)	FICA taxes payable	2,340
	Federal Income tax withholdings payable	2,000
	State Income tax withholdings payable	1,170
	Union Dues Payable	200
	Cash		5,710
	(To record the deduction paid in cash)