Question

Information ABC Company Number of Employees 7 Employee Name Hours worked Hourly rate John Doe 40 $25.00 Jane Jones 40 $24.00 Jessie Smith 40 $17.00 Erik Ackers 25 $15.00 Nan Schmit 30 $17.00 Larry Johnson 35 $18.00 Christopher Hay 40 $18.00 Assume Federal Income Tax will be withheld at a rate of 20% for everyone. FICA Social Security rate is 6.2% and Medicare is 1.45%. When you called your State, they told you that your State Unemployment tax rate would be 5.4%. Recall that the Federal Unemployment rate is the same for all businesses. Required: Complete the Payroll Report worksheet Use the Transactions worksheet to complete your Journal Required: Complete the payroll report below using the information provided on the Information tab. January Employee Name Hours worked Hourly rate Gross Pay Federal Withholding Social Security Medicare Net Required: Use the transactions below to complete your Journal on the next worksheet. Tip: Refer to pages 473-476 of your text for examples. Transactions January 1 Record accrued payroll for January using the Payroll Report 2 Record employer payroll taxes for the same Payroll Report (hint - remember to record FUTA and SUTA as well) 7 Record payment of cash to employees. Required: Enter the journal entries from the transactions found on the Transaction worksheet Journal Entries Date Account Title Debit Credit

Answer 1

Employee Name		Hours worked	Hourly rate	Gross pay	Federal withholding	Social security	Medicare	Net
		1	2	3=1*2	4=3*20%	5=3*(6.2%)	6=3*(1.45%)	7=3-4-5-6
John Doe		40	25	1000	200	62	14.5	723.5
Jane Jones		40	24	960	192	59.52	13.92	694.56
Jessie Smith		40	17	680	136	42.16	9.86	491.98
Erik Ackers		25	15	375	75	23.25	5.44	271.31
Nan Schmit		30	17	510	102	31.62	7.40	368.99
Larry Johnson		35	18	630	126	39.06	9.14	455.81
Christopher Hay		40	18	720	144	44.64	10.44	520.92
Total				4875	975	302.25	70.69	3527.06
Journal entry to record accrued salaries:
Date	Account title			Debit	Credit
	Salaries and wages expense			4875
	Federal taxes payable				975
	Social security taxes payable				302.25
	Medicare taxes payable				70.69
	Salaries and wages payable				3527.06
Employer payroll taxes:
Employee Name		Gross pay	Social security	Medicare	State Unemployment tax rate	Federal Unemployment tax rate
		1	2=1*(6.2%)	3=1*(1.45%)	4=1*(5.4%)	5=1*(0.6%)
John Doe		1000	62	14.5	54	6
Jane Jones		960	59.52	13.92	51.84	5.76
Jessie Smith		680	42.16	9.86	36.72	4.08
Erik Ackers		375	23.25	5.4375	20.25	2.25
Nan Schmit		510	31.62	7.395	27.54	3.06
Larry Johnson		630	39.06	9.135	34.02	3.78
Christopher Hay		720	44.64	10.44	38.88	4.32
Total		4875	302.25	70.6875	263.25	29.25
Date	Account title			Debit	Credit
	Payroll tax expense			665.44
	Social security taxes payable				302.25
	Medicare taxes payable				70.69
	State unemplyment taxes payable				263.25
	Federeal unemplyment taxes payable				29.25
	(To record employer payroll tax expenses)
	Salaries and wages payable			3527.06
	Cash				3527.06
	(Cash paid to employees)