Question

Beth Corbin’s regular hourly wage rate is $16, and she receives an hourly rate of $24 for work in excess of 40 hours. During a January pay period, Beth works 45 hours. Beth’s federal income tax withholding is $95, she has no voluntary deductions, and the FICA tax rate is 7.65%. Compute Beth Corbin’s gross earnings and net pay for the pay period.

 

 

Answer 1

Calculate the amount of salaries and wages expense as follows:

 

Salaries and wages expense = (40 hours × $16 per-hour) +

                                                 {(45 hours – 40 hours) × $24 per-hour}

                                               = $640 + $120

                                               = $760

 

Explanation

The hourly regular wage rate of $16 would be paid for 40 hours and the hours worked more than 40 hours, that is 5 hours (45hours − 40hours) would be paid an hourly wage rate of $24. The total salaries and wages expense is $760.

 

Basing on the given information, record the journal entry for B’s payment.

 

Record the journal entry as follows:

 

Explanation

Payment of salary being an expense has been debited. The amount of salaries and wages payable, that is $606.86 being a liability is credited and the amount of federal taxes and FICA taxes payable also being liability are credited.

 

Basing on the given information, calculate the amount of salaries and wages payable.

 

Calculate the amount of salaries and wages payable as follows:

 

Explanation

The federal taxes payable and FICA taxes payable are reduced from the salaries and wages expense to arrive at the value of salaries and wages payable as only this amount will form the cash component of the salaries and wages expense.

 

Basing on the given information, record the journal entry for payment of salaries.

 

Record the journal entry for the salaries expense as shown below:

 

Explanation

Since cash is paid as salary, cash being an asset is credit as payment of cash is decrease in asset and salaries and wages payable account is debited as payment of cash reduces the liability.

Calculate the amount of salaries and wages expense as follows:

 

Salaries and wages expense = (40 hours × $16 per-hour) +

                                                 {(45 hours – 40 hours) × $24 per-hour}

                                               = $640 + $120

                                               = $760