Question

Stark Company has five employees. Employees paid by the hour receive a $11 per hour pay rate for the regular 40-hour workweek plus one and one-half times the hourly rate for each overtime hour beyond the 40 hours per week. Hourly employees are paid every two weeks, but salaried employees are paid monthly on the last biweekly payday of each month. FICA Social Security taxes are 6.2% of the first $118,500 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. The company has a benefits plan that includes medical insurance, life insurance, and retirement funding for employees. Under this plan, employees must contribute 5 percent of their gross income as a payroll withholding, which the company matches with double the amount. Following is the partially completed payroll register for the biweekly period ending August 31, which is the last payday of August.

a. Complete this payroll register by filling in all cells for the pay period ended August 31. (Round your answers to 2 decimal places.)'

Employee Cumulative Pay (Excludes Current Period) Current Period Gross Pay FIT Withholding FUTA FICA S.S. Employee FICA Medicare Employee Employee Plan Withholding Employee Net Pay Pay Type Pay Hours Gross Pay SIT Withholding SUTA FICA S.S. Employer FICA Medicare Employer Employer Plan Expense Kathleen $115,900.00 Salary $7,000.00 $2,350.00 440.00 Anthony 6,250.00 Salary 570.00 94.00 28.50 27.00 57.00 Nichole 15,700.00 Regular 80 124.00 Overtime 9 32.00 Zoey 6,550.00 Regular 80 114.00 Overtime 5 29.00 Gracie 5,350.00 Regular 73 803.00 104.00 Overtime 28.00 Totals $149,750.00 $2,786.00 $0.00 $0.00 $0.00 $28.50 $0.00 556.00 0.00 0.00 0.00 57.00

b, c, d & e. Prepare the August 31 journal entry to: (Round your answers to 2 decimal places.)

b. Record the accrued biweekly payroll and related liabilities for deductions.
c. Record the employer’s cash payment of the net payroll of part b.
d. Record the employer’s payroll taxes including the contribution to the benefits plan.
e. Pay all liabilities (except for the net payroll in part c) for this biweekly period.

Answer 1

a.

Employee	Cumulative Pay (Excludes current period)	Current Period Gross Pay			FIT Withholding	FUTA	FICA SS Employee	FICA Medicare Employee	Employee Plan Withholding	Employee Net Pay
											Pay Type	Pay Hours	Gross Pay	SIT Withholding	SUTA	FICA SS Employer	FICA Medicare Employer	Employer Plan Expense
																			Kathleen	115900.00	Salary		7000.00	2350.00	0	161.20	101.50	350.00	3597.30
				440.00	0	161.20	101.50	700.00
		Anthony	6250.00	Salary		570.00	94.00	3.42	35.34		8.27	28.50	376.90
							27.00	30.78	35.34		8.27	57.00
Nichole	15700.00	Regular	80	1028.50	124.00		63.77	14.91	51.43	742.39
		Overtime	9		32.00		63.77	14.91	102.85
Zoey	6550.00	Regular	80	962.50	114.00	2.70	59.68	13.96	48.13	697.74
		Overtime	5		29.00	24.30	59.68	13.96	96.25
Grace	5350.00	Regular	73	803.00	104.00	4.82	49.79	11.64	40.15	569.42
					28.00	43.36	49.79	11.64	80.30
Totals	149750.00			10364.00	2786.00	10.94	369.77	150.28	518.20	5983.75
					556.00	98.44	369.77	150.28	1036.40

b. Entry to record the payroll
Date	Account Title	Debit	Credit
Aug.31	Salaries and Wages Expense	10364.00
	Federal Income Tax Payable		2786.00
	State Income Tax Payable		556.00
	FICA Social Secutiry Tax Payable		369.77
	FICA Medicare Tax Payable		150.28
	Employee Medical Insurance Payable		518.20
	Salaries and Wages Payable		5983.75
	(Payroll for the pay period ending Aug.31)
c. Cash payment of salaries and wages
Date	Account Title	Debit	Credit
Aug.31	Salaries and wages payable	5983.75
	Cash		5983.75
d. Employer payroll taxes
Date	Account Title	Debit	Credit
Aug.31	Payroll Tax Expense	1665.83
	FICA Social Secutiry Tax Payable		369.77
	FICA Medicare Tax Payable		150.28
	FUTA Payable		10.94
	SUTA Payable		98.44
	Employee Medical Insurance Payable		1036.40
e. Payment of alll liabilities
Date	Account Title	Debit	Credit
Aug.31	FICA Social Secutiry Tax Payable	739.54
	FICA Medicare Tax Payable	300.56
	Federal Income Tax Payable	2786.00
	State Income Tax Payable	556.00
	FUTA Payable	10.94
	SUTA Payable	98.44
	Employee Medical Insurance Payable	1554.60
	Cash		6046.08