Question

Mr.Ahmed works for Oman Networking company and earns a monthly salary of OMR 2000. There is no overtime pay. Oman Networking withholds incomes taxs at 15% of gross pay. In addition to payroll taxes, Mr. Ahmed elects to contribute 5% monthly to united way. Oman networking also deducts OMR 150 Monthly for co-payment of the health insurance premium. Employee OASDI tax 4.2% and employee medicare 1.45%.

Requirements

(a) Compute Mr. Ahmed net pay for October.

(b) Journalize the accrual of salaries expense and the payments related to the employment of Mr. Ahmed.

Answer 1

Ang 7 ) Mr. Ahmed 2,000 OMR Gross Pay Monthly lesso (300) hlithholds income tan 15% of Gross Pary 1. e., 15% 2000 2000 x 15 300 100 less o (100) Contribute monthly to United way Gross Pay ies 2,000°x 5 5% of 100 100 lesso (150) Deduction Health insurance Premium Monthly less (84) Social Security tax (OASDI) tas 4.20% of Grou Pay 2000_x 4.20 100 84 less o (29) Medicare tan 1.45% of Gross Pay 2000X_1245 100 29 Cash or salaries Iwages Payable E OMR_1,337 i. e., Net Pay Net Pay for Octobey is OMR 1,337 Au Mr. Ahmed

b) Ans Journalize the Accrual of salaries Expense and the payments related to Mr. Ahmed as Employer, Date October Jowinal Entries Payee Employees as Mr. Ahmed. Account Titles And Explanations Debit Credit Salaries Eupense OMR 2000 Income tax Payable OMR 300 100 United Way Contribution Health Insurance Payable 150 Social Secwüty taxe 84 Payable Medicare tan Payable 29 Salaries/wages Payable 1,337 To record accrual Payroll of Salaries Eupense Explanation of Salaries Enpense is a Expenses which increase the value of Expenses Ruu Salaries Expenses Alc debited as OMR 2000 and Health Insurance Payable and Income tax Payable and social Secwity anal Medicare tare Preyable is liabilies which increases the value of Liabilities Therefore Income tax Income tax Payable credited Bus OMR 300 And Social Security and Medicare tan Payable Credited as OMR 84 and OMR 29 respectively And Health Insurance Payable Premium credited OMR 150 And Mr. Ahmed Elected to contribute to United way so United way contribution is credited as OMRIOD And The Difference is after all the Deduction salaries or

as Credited OMR 1331, wages Payable Date October Credit Journal Entries Net pay to Mr. Ahmed Account Titles And Explanation Debit Salaries Payable OMR_1331 Cash OMR 1,337 the (To record Net Cash Pay to the Mr. Ahmed OMR 1,337) as Explanation & salaries Payable is a liability which decrease the value of liability Therefore Salaries Payable Account is Debited with OMR 1,337 And Cash is Asset due to pay to the Mr. Abomed the value of Assets decreases. Thus Cash is credited with OMR \,337. an يل