Question

The Board of Directors has moved further into reviewing the liabilities of ABC Company. They wish to learn more about the payroll requirements of ABC Company. Using the spreadsheet below, complete the workbook for one payroll cycle.

Information

ABC Company                      
Number of Employees   7                  
                      
Employee Name       Hours worked   Hourly rate          
John Doe       40    $25.00           
Jane Jones       40    $24.00           
Jessie Smith       40    $17.00           
Erik Ackers       25    $15.00           
Nan Schmit       30    $17.00           
Larry Johnson       35    $18.00           
Christopher Hay       40    $18.00           
                      
Assume Federal Income Tax will be withheld at a rate of 20% for everyone.                      
FICA Social Security rate is 6.2% and Medicare is 1.45%.                      
When you called your State, they told you that your State Unemployment tax rate would be 5.4%.                      
Recall that the Federal Unemployment rate is the same for all businesses.                      
  
Required: Complete the payroll report below using the information provided on the Information tab. Part 1                           
January                              
Employee Name       Hours worked   Hourly rate   Gross Pay   Federal Withholding   Social Security   Medicare   Net
John Doe                              
Jane Jones                              
Jessie Smith                              
Erik Ackers                              
Nan Schmit                              
Larry Johnson                              
Christopher Hay                              
Totals          

Required Transactions   Part 2
                              
January   1   Record accrued payroll for January using the Payroll Report                      
                              
   2   Record employer payroll taxes for the same Payroll Report (hint - remember to record FUTA and SUTA as well)                      
                              
   7   Record payment of cash to employees.           

Required: Enter the journal entries from the transactions found on the Transaction worksheet Part 3
          
          
Journal Entries          
          
Date   Account Title   Debit    Credit
          
          
          
          
          
          
          
          
           
                   

Answer 1

1	Employee Name	Hours Worked	Hourly rate	Gross pay	Federal Withholding	Social security @ 6.2%	Medicare	Net amount
	John Doe	40	25	1,000	200	62	15	724
	Jane Jones	40	24	960	192	60	14	695
	Jessie smith	40	17	680	136	42	10	492
	Erik Ackers	25	15	375	75	23	5	271
	Nan Schmit	30	17	510	102	32	7	369
	larry johnson	35	18	630	126	39	9	456
	Christopher Hay	40	18	720	144	45	10	521
				4,875	975	302	71	3,527
2 & 3	Record the transaction and journal entry
	Date	Account title	Debit	Credit
	1/1/20XX	Salary Expenses	4,875
		To Salary payable		3,527
		To Social Security		302
		To Medicare		71
		To Federal Income tax		975
	2/1/20XX	Employee Benefit expenses	566
		To Social security		302
		To State Unemployment tax		263
	7/1/20XX	Salary Payable	3,527
		To Bank		3,527