Question

The following is a payroll sheet for Crane Imports for the month of September 2020. 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 $128,400. In addition, 1.45% is charged both employer and employee for an employee’s wages in excess of $128,400 per employee.

(a)

Complete the payroll sheet. (Round answers to 2 decimal places, e.g. 15.26.)

												Unemployment Tax
Name		Earnings to Aug. 31			September Earnings			Income Tax Withholding		FICA		State		Federal
B. D. Williams		$6,900			$800			$		$		$		$
D. Raye		6,400			700
K. Baker		7,700			1,100
F. Lopez		13,600			1,900
A. Daniels		117,900			13,700
B. Kingston		123,200			15,600
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 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

Answer 1

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Solution: a) FICA can be reported double as contribution from both: Unemployment Tax Name Earning to September Income tax FICA State Federal Aug. 31 Earning Withholding B. D. Williams 6900 $ 800.00 $ 80.00 $ 61.20 $ 1.00 $ 0.80 D. Raye 6400 $ 700.00 $ 70.00 $ 53.55 $ 5.00 $ 4.00 K. Baker 7700 $ 1,100.00 $ 110.00 $ 84.15 $ $ F. Lopez 13600 $ 1,900.00 $ 190.00 $ 145.35 $ $ A. Daniels 117900 $13,700.00 $ 1,370.00 $ 849.65 $ $ [(128400-117900)*6.2%] (13700*1.45%) B. Kingston 123200 $ 15,600.00 $ 1,560.00 $548.60 $ $ [(128400-123200)*6.2%] (15600*1.45%) Total 275700 $33,800.00 $ 3,380.00 $1,742.50 $ 6.00 $ 4.80 b) Naming conventiion is not available, can be slightly different: Journal Entries Account title and explaination Salaries and Wages Expense FICA Payable (Refer sch) Income tax payable Cash (To record the salaries and wages expense) Debit| Credit $33,800.00 $ 1,742.50 $ 3,380.00 $28,677.50