Question

Serial Problem Business Solutions LO P2, P3, C2 Following are some transactions and events of Business Solutions. Feb. 26 The company paid cash to Lyn Addie for eight days' work at $140 per day Mar. 25 The company sold merchandise with a $2,700 cost for $3,400 on credit to Wildcat Services, invoice dated March 25 Required: 1. Assume that Lyn Addie is an unmarried employee. Her $1,120 of wages have deductions for FICA Social Security taxes, FICA Medicare taxes, and federal income taxes. Her federal income taxes for this pay period total $112. Compute her net pay for the eight days' work paid on February 26. (Round your answer to 2 decimal places. Do not round intermediate calculations.) 2. Record the journal entry to reflect the payroll payment to Lyn Addie as computed in part 1. (Round your answers to 2 decimal places. Do not round intermediate calculations.) 3. Record the journal entry to reflect the (employer) payroll tax expenses for the February 26 payroll payment. Assume Lyn Addie has not met earnings limits for FUTA and SUTA (the FUTA rate is 0.6% and the SUTA rate is 5.4% for the company. (Round your answers to 2 decimal places. Do not round intermediate calculations.) 4. Record the entries for the merchandise sold on March 25 if a 4% sales tax rate applies. (Round your answers to the nearest whole dollar.) Complete this question by entering your answers in the tabs below. Required 2 Required 3 Required 1 Required 4 Record the entries for the merchandise sold on March 25 if a 4% sales tax rate applies.

Answer 1

solution 1. 1. Social Security Tax rate is 6,2% and Medicare tax rate is 1645% on gross pay for the year 2018. Gross pay = Social Security Rate x Number of days = 140x8 = 1120 Tax = Gross pay y 6.2% = 11208 6.1% = 69.44. Medicare tax = Greys pay x 1.454). = 1120 x 1.45% = 16.24 Income Tax = 112 Net pay = Gross pay- social security Tax - Medicare tax - Income 1120 - 69.44 - 16.24 - 112 Tax - 922.32 2. Journal Date A clount Hiles and explanation Debit Gedit |26/2/18 1120 salaries and wages Expense social security tax Medicare tax 69.44 16.24 Income tax 112 cash 922.32 [To record payment to Lyn Addie for her work] FUTA = Gross pay X 0.6% = SU TA = Gross Day X54% 2 11207 0.6% = 6.72 1720 X 5.4% = 60:48

Journal Date Rasht Credet 152.88 2012118 Account title & Explanation payroll tax expense social security Tax Medecare tax 69.44 16.24 6.72 60.48 FUTA SUTA [To record employer's payrot tax experse] Tax is chargeable on sale 4. Sale revenue. sales Tax amount - Sales revenue & Rate = 3400 X 4% = 136 Journal: Ibate Account title & Explanation Debit Gredet 25/3/18 Accounts receivable 3536 sales revenue 3400 136 sales tax payable [ To record March Saler together with 4% sales Tax]