Question

Problem 13-4 Below is a payroll sheet for Windsor Import Company for the month of September 2017. The company is allowed a 1% unemployment compensation rate by the state: the federal unemployment tax rate is 0.8% and the maximum for both is $7,000. Assume a 10% federal income tax rate for all employees and a 7.65% FICA tax on employee and employer on a maximum of $118,500. In addition, 1.45% is charged both employer and employee for an employee's wages in excess of $118,500 per employee. Complete the payroll sheet. (Round answers to 2 decimal places, e.g. 15.26.) Unemployment Tax Earnings to Aug. 31 Name Income Tax Withholding FICA State September Earnings $900 Federal B. D. Williams $6,800 D. Raye 6,500 800 K. Baker 7,700 1,200 F. Lopez 14,700 2,000 A. Daniels 12,200 108,300 113,000 B. Kingston 16,900 Total Make the necessary entry to record the payment of the payroll. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts, Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Part A

					Unemployment tax
Name	Earnings to Aug. 31	September Earnings	Income Tax Withholding	FICA	State	federal
B.D. Williams	6800	900	90.00	68.85	2.00	1.60
D. Raye	6500	800	80.00	61.20	5.00	4.00
K. Baker	7700	1200	120.00	91.80
F. Lopez	14700	2000	200.00	153.00
A. Daniels	108300	12200	1220.00	176.90
B. Kingston	113000	16900	1690.00	245.05
Total	$257000.00	$34000.00	$3400.00	$796.80	$7.00	$5.60

Income Tax Withholding = September Earnings*10%

12200*1.45% = 176.90

16900*1.45% =245.05

FICA = September Earnings*7.65%

State unemployment tax = 1% upto first $7000

Federal unemployment tax = 0.8% up to first $7000

(7000-6800)*1% = 2.00

(7000-6800)*0.8% = 1.60

(7000-6500)*1% = 5.00

(7000-6500)*0.8% = 4.00

Account titles and explanation	Debit	Credit
Wages and Salaries Expense	34000
Withholding Taxes Payable		3400
FICA Taxes Payable		796.80
Cash		29803.20

Part B

Account titles and explanation	Debit	Credit
Payroll Tax Expense	809.40
FICA Taxes Payable		796.80
Federal Unemployment Tax Payable		7
State Unemployment Tax Payable		5.60

Part C

Account titles and explanation	Debit	Credit
Withholding Taxes Payable	3400
FICA Taxes Payable (796.80*2)	1593.60
Federal Unemployment Tax Payable	7
State Unemployment Tax Payable	5.60
Cash		5006.20