Question

Name Hours Worked Pay Rate Federal Income Tax Withheld

Breschi, K 95 $12 per hour $200

Carballo, P n/a $3,000 per month $850

Dangelo, J 180 $14 per hour $625

Gaines, T n/a $4,500 per month $1,100

Goseco, M n/a $10,100 per month $3,575

Skolnick, J 180 $12 per hour $480

Williams, R 172 $9 per hour $140

Wong, O 195 $16 per hour   $800

SFCC is in a state without an income tax. Employees' federal income tax withholdings depend on various factors, and the amounts are as indicated in the above table.

No employees worked overtime, with the exception of Oscar Wong, who worked 15 hours of overtime. Overtime is paid at 150% of the normal hourly rate.

Assume that gross pay is subject to social security taxes at a 6.5% rate, on an annual base of $150,000. Assume that Medicare/Medicaid taxes are 1.5% of gross earnings. These taxes are matched by the employer. Only Marcia Goseco had earned more than $140,000 during the months leading up to October. Because of overtime and a bonus, she had earned $140,900 during that time period.

SFCC has 100% participation in a $10 per month employee charitable contribution program. These contributions are withheld from monthly pay.

SFCC pays for workers' compensation insurance at a 2% of gross pay rate. None of this cost is paid by the employee.

SFCC provides employees with a group health care plan; however, the cost is fully paid by employees. The rate is $250 per month, per employee.

SFCC's payroll is subject to federal (0.5%) and state (1.5%) unemployment taxes on each employee's gross pay, up to $8,000 per year. All employees had earned in excess of $8,000 in the months leading up to October, with the exception of Karen Breschi. Karen was first employed during the month of October.

SFCC contributes 5% of gross pay to an employee retirement program. Employees do not contribute to this plan.

(a) Complete the payroll schedule on the website's accompanying blank worksheet.

Is (a) correct?

	Deductions
Gross Earnings	Federal Income Tax	Social Security Tax	Medicare/ Medicaid	Charitable	Health Insurance	Net Earnings
$1,140	$    200.00	$     74.10	$     17.10	$     10.00	$    250.00	$    588.80
$3,000	850.00	195.00	45.00	10.00	250.00	1,650.00
$2,520	625.00	163.80	378.00	10.00	250.00	2,780.00
$4,500	1,100.00	292.50	67.50	10.00	250.00	2,780.00
$10,100	3,575.00	656.50	151.50	10.00	250.00	5,457.00
$2,160	480.00	140.40	32.40	10.00	250.00	1,247.20
$1,548	140.00	100.62	23.22	10.00	250.00	1,024.20
$3,240	800.00	210.60	48.60	10.00	250.00	1,920.80
$28,208	$7,770	$1,833.52	$    763.32	$     80.00	$2,000	$17,447.96

b) Prepare journal entries for SFCC's payroll and the related payroll expenses.

Answer 1

b. journal Entries
Account Title	Debit	Credit
Salaries expense	28208
Federal Income tax payable		7770
FICA taxes payable -Social security		1833.52
FICA taxes payable -Medicare		423.12
Charitable contributions deductions		80
Group health insurance deductions		2000
Salaries payable		16101.36
(To accrue the month's salaries & deductions)
Payroll expenses	4254
FICA taxes payable -Social security		1833.52
FICA taxes payable -Medicare		423.12
Workers' comp.Ins.		564.16
FUTA payable		5.7
SUTA Payable		17.1
Contribution to Employee retirement pgm.		1410.4
(Employer's share of payroll expenses)
Salaries payable	16101.36
Federal Income tax payable	7770
FICA taxes payable -Social security	3667.04
FICA taxes payable -Medicare	846.24
Charitable contributions deductions	80
Group health insurance deductions	2000
Workers' comp.Ins.	564.16
FUTA payable	5.7
SUTA Payable	17.1
Contribution to Employee retirement pgm.	1410.4
Cash		32462
(Remittances of above deductions)

NOTE: Your only error was deducting $ 378 instead of $ 37.8 under Medicare for Dangelo ,J--Others, all perfect.