Question

P11-26A Computing and journalizing payroll amounts Logan White is general manager of Valuepoint Salons. During 2018, White worked for the company all year at a equal to 15% of his annual salary $13,600 monthly salary. He also earned a year-end bonus White's federal income tax withheld during 2018 was $4,876 on his bonus check. State income tax withheld came to $150 per month, plus $60 on the bonus. FICA tax was withheld on the annual earnings. White authorized the following payroll deductions: Charity Fund contribution of 1 % of total earnings and life insurance of $40 per month. $1,360 per month, plus Valuepoint incurred payroll also paid state unemployment tax and federal unemployment tax. tax expense on White for FICA tax. The company Requirements 1. Compute White's gross pay, payroll deductions, and net pay for the full year 2018. Round all amounts to the nearest dollar. 2. Compute Valuepoint's total 2018 payrol 3. Make the journal entry to record Valuepoint's expense for White's total earnings for the year, his payroll deductions, and net pay. Debit Salaries Expense and Bonus Expense Cash for net pay. An explanation is not required. 4. Make the journal entry to record the accrual of Valuepoint's payroll for White's total earnings. tax expense for White. appropriate. Credit liability accounts for the payroll deductions and as tax expense 5. Make the journal entry for the payment of the payroll withholdings and taxes.

Answer 1

1. For the full year 2018
Gross pay:
Salary (13600*12)		163200
Bonus(163200*15%)		24480
Gross pay		187680
Pay-roll deductions:
Federal income tax withheld
on salary(1360*12)	16320
on Bonus	4876
Total FIT withheld		21196
State income tax withheld
on salary(150*12)	1800
on Bonus	60
Total SIT withheld		1860
FICA taxes
Social security tax (128400*6.2%0	7961
Medicare(187680*1.45%)	2721
Total FICA taxes		10682
Charity Fund contribution(187680*1%)		1877
Life insurance contributions (40*12)		480
Total payroll deductions		36095
Net pay		151585
2.Valuepoint's total payroll tax expense for White
Employer contribution of FICA taxes
Social security tax (128400*6.2%0	7961
Medicare(187680*1.45%)	2721
Total FICA taxes		10682
SUTA (7000*5.4%)		378
FUTA (7000*0.6%)		42
Total payroll tax expense		11102
3. Journal entry	Debit	Credit
Salaries expense	163200
Bonus expense	24480
FIT withheld		21196
SIT withheld		1860
FICA taxes payable		10682
Charity Fund contribution		1877
Life insurance contributions		480
Cash		151585
4.Payroll tax expense	11102
FICA taxes payable		10682
SUTA payable(7000*5.4%)		378
FUTA payable(7000*0.6%)		42
5…
FIT withheld	21196
SIT withheld	1860
FICA taxes payable	21364
SUTA payable	378
FUTA payable	42
Charity Fund contribution	1877
Life insurance contributions	480
Cash		47197