Computing gross earnings, determining deductions, journalizing payroll transactions.Juan P...

Computing gross earnings, determining deductions, journalizing payroll transactions.

Juan Padronas works for H&C Commercial Builders, Inc. His pay rate is $13.00 per hour and he receives overtime pay at one and one-half times his regular hourly rate for any hours worked beyond 40 in a week. During the pay period ended December 31, 2016, Juan worked 48 hours. Juan is married and claims three withholding allowances on his W-4 form. Juan’s cumulative earnings prior to this pay period total $28,000. Juan’s wages are subject to the following deductions:

1. Social security tax at 6.2 percent

2. Medicare tax at 1.45 percent

3. Federal income tax (use the withholding table shown in Figure 10.2B on page 338)

4. Health insurance premiums, $150

5. Charitable contribution, $20

6. Credit Union Savings, $25

INSTRUCTIONS

1. Compute Juan’s regular, overtime, gross, and net pay.

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2. Assuming the weekly payroll has been recorded, journalize the payment of his wages for the week ended December 31, 2016. Use journal page 18.

Analyze: Based on Juan’s cumulative earnings through December 31, how much overtime pay did he earn this year?

FIGURE 10.2B Sample Federal Withholding Tax Tables (Partial) Married Persons—Weekly Payroll Period