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 $135 per day. 

Mar. 25 The company sold merchandise with a $2,162 cost for $2,848 on credit to Wildcat Services, invoice dated March 25. 

Required:

 1. Assume that Lyn Addie is an unmarried employee. Her $1,080 of wages are subject to no deductions other than FICA Social Security taxes, FICA Medicare taxes, and federal income taxes. Her federal income taxes for this pay period total $108. 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.) et pay 145 80 2. Record the jounal entry to reflect the payroll payment to Lyn Addie as computed in part 1 (Round your answers to 2 de 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.) 

Answer 1

Req 1.
Gross Wages:
Wage rate per day				135
Numer of days worked				8
Gross Wages:					1080
Less: Taxes withheld
Income Ttax withheld				108
FICA social security tax (1080*6.20%)				66.96
FICA Medicare Tax (1080*1.45%)				15.66
Total Amount withheld					190.62
Net Pay					889.38
Req 2.
Journal entry:
Date	Accounts title and explanations				Debit $	Credit $
26-Feb	Salaries and wages expenses				1080
	Federal income tax Payable					108
	Federal Social Security Tax payable					66.96
	Federal Medicare tax payable					15.66
	Cash account					889.38
	(For salaries and wages paid after deducting the withheld amount)
26-Feb	Payroll tax expenses				132.3
	Federal Social Security Tax payable (1080*6.20%)					66.96
	Federal Medicare tax payable (1080*1.45%)					15.66
	Federal Unemployment tax payable (1080*0.60%)					6.48
	State Unemployment tax payable (1080*4%)					43.2
	(For payroll tax expense booked)
25-Mar	Accounts receivable				2840
	Sales revenue (2840/104*100)					2730.77
	Sales tax payable (2840/104 *4)					109.23
25-Mar	Cost of goods sold				2162
	Merchandise inventory					2162