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Homework: Chapter 11 Homework Score: 1.25 of 20 pts & P11-26A (similar to) Save 5 of 6 (6 complete) | > | HW Score: 40.9%, 20.45 of 50 pts EQuestion Help Lenny Worthington is general manager of Countrywide Salons. During 2018, Worthington worked for the company all year at a $12,900 monthly salary. He also earned a year-end bonus equal to 5% of his annual salary Worthington's federal income tax withheld during 2018 was $1 290 per month, plus $1,161 on his bonus check. State income tax withheld came to $70 per month, plus $50 on the bonus. FICA tax was withheld on the annual earnings Countrywide incurred payroll tax expense on Worthington for FICA tax. The company also paid state unemployment tax and federal unemployment tax (Click the icon to view payroll tax rate information) Read the requirements Worthington authorized the following payroll deductions Charity Fund contribution of 2% of total earnings and life insurance of $45 per month Requirement 1. Compute Worthington's gross pay, payroll deductions, and net pay for the full year 2018 Round all amounts to the nearest dollar Begin by computing Worthington's gross pay for the year (Round all amounts to the nearest doillar) Gross pay Choose from any list or enter any number in the input fieids and then click Check Answer parts remaining Clear All

Answer 1

Step by Step Answer of all requirements:

Requirement 1:

- Worthingtons Gross Pay :

Annual Salary - $12900*12 = $ 154800

Year end bonus @ 5% of annual Salary ($154800*5%) = $ 7740

Total Gross Pay = $ 162540

- Payroll Deductions

Charity Contributions @ 2% of total earnings ($162540*2%) = $ 3250.8

Life Insurance ($45 per month * 12) = $ 540

Total Payroll Deductions = $ 3790.8

- Net pay for the full year 2018

Total Earnings $1,62,540

Less:Total Payroll deductions $3,790.8

Less: Federal Income tax withheld ($1290*12+1161) $16,641

Less: State income tax withheld ($70*12+50) $8,90

Net Pay for full year $141218.2

Requirement 2.Total Payroll tax Expense to Country Wide

• OASDI on [email protected]% $7,347
• Add: Medicare @1.45% on $1,62,540 $2,356.83
• Add:FUTA @ .6% on $7000 $42
• Add:SUTA @5.4% on $7000 $378

Total payroll tax expense = $10,123.83

Requirement 3.Journal Entries in the books of Countrywide

-Journal Entry to record total earning

Salary Expenses account Dr $1,54,800

Bonus Expenses account Dr. $7,740

To Worthingtons salary payable account $1,31,514.37  

To Federal Income Tax Payable account $16,641

To State Income Tax Payable account    $8,90

To Charity Fund Payable account $3250.8  

To Life Insurance to Employees Payable account $5,40

To Employee OASDI payable account ($118500*6.2%) $7347

To Employee Medicare payable account ($162540*1.45%) $2356.83

-Journal Entry for payment of Salary

  Worthingtons salary payable account Dr $1,31,514.37

To Bank Account   $1,31,514.37

Requirement 4.Journal Entry for Accrual Of payroll Tax Expense

Payroll Tax Expense Account Dr $10,123.8

To Employer OASDI payable account $7,347

To Employer Medicare payable account $2,356.83     

  To Employer FUTA payable account $42

To Employer SUTA payable account $3,78

Requirement 5. Journal Entry for payroll withholding and taxes:

Employer OASDI payable account Dr $7,347

Employer Medicare payable account Dr $2,356.83     

Employer FUTA payable account Dr $42

Employer SUTA payable account Dr $3,78

Federal Income Tax Payable account Dr $16,641

State Income Tax Payable account Dr $8,90

Charity Fund Payable account Dr $3250.8  

Life Insurance to Employees Payable account Dr $5,40

Employee OASDI payable account ($118500*6.2%) Dr $7347

Employee Medicare payable account ($162540*1.45%) Dr $2356.83

To Bank Account $41,149.46