Question

The following information is available for the employees of Webber Packing Company for the first week of January Year 1:

1. Kayla earns $25 per hour and 1½ times her regular rate for hours over 40 per week. Kayla worked 50 hours the first week in January. Kayla’s federal income tax withholding is equal to 8 percent of her gross pay. Webber pays medical insurance of $85 per week for Kayla and contributes $48 per week to a retirement plan for her.
2. Paula earns a weekly salary of $1,150. Paula’s federal income tax withholding is 19 percent of her gross pay. Webber pays medical insurance of $100 per week for Paula and contributes $100 per week to a retirement plan for her.
3. Vacation pay is accrued at the rate of 2 hours per week (based on the regular pay rate) for Kayla and $85 per week for Paula.

Assume the Social Security tax rate is 6.0 percent on the first $110,000 of salaries and the Medicare tax rate is 1.5 percent of total salaries. The state unemployment tax rate is 5.4 percent and the federal unemployment tax rate is 0.6 percent of the first $7,000 of salary for each employee.

d. Prepare the journal entry to record the payroll tax expense and fringe benefit expense for Webber Packing Company for the week. (Round your answers to 2 decimal places.)
  

Journal entry worksheet

• Record the entry for payroll tax expense.

Note: Enter debits before credits.

	Date General Journal Debit Credit Jan.

Answer 1

Employee Name	Working Hours	Normal working hours	Overtime	Hour rate normal	OT rate	Total payment	Withholding taxes	Social security	Mediclaim insurance	Net Payment
Kayla	50.00	40.00	10.00	25.00	37.5	1375	110	82.50	20.63	1161.87
Paula		1150	218.5	69	17.25	845.25
						2,525	328.5	151.5	37.88	2,007.12

S.NO	Particulars		Amount (DR)	Amount (CR)
1	Salary Account		2,525.00
	To Salary payable Account			2,007.12
	To Withholding taxes			328.50	(Refer above calculation)
	To Social secuirty			151.50	(Refer above calculation)
	To Mediclaim insurance			37.88	(Refer above calculation)
	(Being provision made for the salary payable account)
2	Salary Payable account		2,007.12
	To Bank Account			2,007.12
	(Being payment made for the salary payment outstanding)
3	Vacation pay expenses account		135.00
	To Vacation provision payable account			135.00
	(25*2+85)
	(Being provision has been created for the vacation pay)
4
	Salary account (Employee benefit expenses)		659.24
	To Social security account			151.50
	To Mediclaim insurance			185.00
	To Provision for employee retirement			148.00
	To State unemployment tax rate			136.35
	To Federal unemployment tax rate			15.15
	(Being provision created on the part of the employer)