Question

Payroll

Fabulous Footwear employs three salespeople, and pays time-and-a-half for overtime. Weekly paychecks are distributed on the Tuesday following the last day of the week (Saturday). Fabulous Footwear withholds income tax (20%), FICA—OASDI (6.2%), and FICA—Medicare (1.45%). Fabulous Footwear also pays payroll taxes for FICA—OASDI (6.2%), FICA—Medicare (1.45%), and state and federal unemployment (5.4% and 0.6% respectively). The payroll data for the three salespeople for the week ended March 31 follows:

Name Straight Time Rate Hours Worked Beginning Cumulative Earnings

Abbie Boland $15 45 $420

Bo Vincent $17 37 $540

Abbie Boland $22 42    $480

Requirements:

1. Complete the Payroll Register for the three employees for the week ended March 31, 2019. Format to two decimal places.

2. Complete the Payroll Tax Register.

3. Complute the total payroll expense for the week ended March 31. Format to two decimal places.

4. Record the payroll entries Fabulous Footwear makes for each of the following; use cell references to the tax registers for the amounts.

a. Wage expenses related to the three employees on Saturday, March 31.

b. Employer payroll taxes related to the three employees on Saturday, March 31.

c. Payment of all payroll taxes (employee and employer-related) on Tuesday, April 3.

d. Payment of wages on Tuesday, April 3.

Answer 1

Requirement 1: Complete the payroll register for the week as follows

Payroll Register
Employee Name	Earnings							Withholdings
	Beginning Cumulative Earnings	Pay Rate	Hours Worked	Regular Pay	Overtime Pay	Current Period	Ending Cumulative Earnings	OASDI	Medicare	Income Tax	Total Withholding	Net Pay	Check No.	Salaries and Wages Expense
								6.20%	1.45%
1	$420	$15	45	$600	$112.50	$712.50	$1,132.50	$44.18	$10.33	$142.50	$197.01	$515.49		$712.50
2	$540	$17	37	$629	$0	$629.00	$1,169.00	$39.00	$9.12	$125.80	$173.92	$455.08		$629.00
3	$480	$22	42	$880	$66.00	$946.00	$1,426.00	$58.65	$13.72	$189.20	$261.57	$684.43		$946.00
Total	$1,440			$2,109	$178.50	$2,287.50	$3,727.50	$141.83	$33.17	$457.50	$632.49	$1,655.01		$2,287.50

Requirement 2: Complete the payroll tax register as follows

Payroll Tax Register
	Earnings			Employer Payroll Taxes
Employee Name	Beginning Cumulative Earnings	Current Period	Ending Cumulative Earnings	OASDI	Medicare	FUTA	SUTA	Total Taxes
				6.20%	1.45%	0.60%	5.40%
1	$420	$712.50	$1,132.50	$44.18	$10.33	$4.28	$38.48	$97.26
2	$540	$629.00	$1,169.00	$39.00	$9.12	$3.77	$33.97	$85.86
3	$480	$946.00	$1,426.00	$58.65	$13.72	$5.68	$51.08	$129.13
Total	$1,440	$2,287.50	$3,727.50	$141.83	$33.17	$13.73	$123.53	$312.24

Notes:

Requirement 3: Compute total payroll expense for the week as follows

Description	Amount
1	$809.76
2	$714.86
3	$1,075.13

Requirement 4a: Record the following journal entry for wage expenses

Date	Account Title and Explanation	Debit	Credit
	Wage Expenses	$2,287.50
	FICA-OASDI Taxes Payable		$141.83
	FICA-Medicare Taxes Payable		$33.17
	Employee Income Taxes Payable		$457.50
	Wages Payable		$1,655.01
	To record wage expenses

Requirement 4b: Record the following journal entry for employer payroll taxes

Date	Account Title and Explanation	Debit	Credit
	Payroll Tax Expense	$312.24
	FICA-OASDI Taxes Payable		$141.83
	FICA-Medicare Taxes Payable		$33.17
	Federal Unemployment Taxes Payable		$13.73
	State Unemployment Taxes Payable		$123.53
	To record employer' payroll tax expense

Requirement 4c: Record the following journal entry for the payment of payroll taxes

Date	Account Title and Explanation	Debit	Credit
	FICA-OASDI Taxes Payable	$283.65
	FICA-Medicare Taxes Payable	$66.34
	Employee Income Taxes Payable	$457.50
	Federal Unemployment Taxes Payable	$13.73
	State Unemployment Taxes Payable	$123.53
	Cash		$944.74
	To record payment of payroll taxes

Requirement 4d: Record the following journal entry for the payment of wages

Date	Account Title and Explanation	Debit	Credit
	Wages Payable	$1,655.01
	Cash		$1,655.01
	To record payment of wages