Question

Calculate payroll for Uno company’s one employee for the first week of March. Their only employee worked 50 hours and makes $12/hour. The employee has not exceeded any of the wage or tax limits. Use the tax rates as follows:

TAX	RATE	LIMITS
FICA – Soc Sec	6.20%	$118,500
FICA – Medicare	1.45%	None
Fed Inc Tax	8.00%	None
FUTA	0.60%	$7,000
SUTA	5.40%	$12,000

Required:

1. Calculate gross pay, deductions, and net pay.
2. Prepare the journal entry to record wages expense and its related payroll liabilities for the employee’s payroll.
3. Prepare the journal entry to record the payroll tax expense and related liabilities for Uno Company’s payroll.

Answer 1

Gross Wages:
Number of hours worked	50
Multiply: Wage rate per hour	12
Gross Wages:		600
Deduction:s
Federal Income tax (600*8%)	48
FICA Social Security tax (600*6.20%)	37.2
FICA Medicare (600*1.45%)	8.7
Total Deductions		93.9
Net salaries		506.1
Payroll tax expense:
FICA Social Security tax (600*6.20%)	37.2
FICA Medicare (600*1.45%)	8.7
FUTA (600*0.60%)		3.6
SUTA (600*5.40%)		32.4
Total Payroll tax expense	81.9
Journal entries:
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Salaries and wages expense		600
	Federal Income tax payable			48
	FICA Social security tax payable		37.2
	FICA Medicare tax payable			8.7
	Salaries payable				506.1
	(for salaries payable)
b.	Payroll tax expense			81.9
	FICA Social security tax payable		37.2
	FICA Medicare tax payable			8.7
	Federal Unemployment tax payable		3.6
	State Unemployment tax payable		32.4
	(for payroll tax expense of employer payable)