Question

Lori Longpie is an employee who is paid monthly. For the month of January of the current year, she earned a total of $8,260. The FICA tax for social security is 6.2% and the FICA tax rate for Medicare is 1.45%. The FUTA tax rate of .6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from her earnings was $1,325.17. She also had union dues of $50 withheld from her pay. Complete the following:

1) Calculate her net pay, showing all components.

2) Calculate the employer’s payroll taxes due.

3) Prepare the journal entries required by #1 and #2

Show all calculations!

Answer 1

1.)		Amount in $
	Gross Earnings	8,260.00
	Less: Income tax withheld	1,325.17
	Less: FICA-Social securtiy Tax	512.12
	( 8,260 x 6.2% )
	Less: FICA- Medicare Tax	119.77
	( 8,260 x 1.45% )
	Less: Union Due	50.00
	Net Pay	6,252.94
2.)		Amount in $
	FICA-Social securtiy Tax	512.12
	FICA-Medicare Tax	119.77
	FUTA Tax ( 7,000 x 0.6% )	42.00
	SUTA Tax ( 7,000 x 5.4% )	378.00
	Total Payroll taxes due	1,051.89

3.)	S.No.	Account Titles & Explanation	Debit $	Credit $
	1.)	Salaries Expense	8,260.00
		Withholding Tax payable		1,325.17
		FICA-Social Security Tax payable		512.12
		FICA-Medicare Tax payable		119.77
		Union Due payable		50.00
		Salaries Payable		6,252.94
	2.)	Payroll Tax Expense	1,051.89
		FICA-Social Security Tax payable		512.12
		FICA-Medicare Tax payable		119.77
		FUTA Tax Payable		42.00
		SUTA Tax payable		378.00