Question

Stark Company has five employees. Employees paid by the hour receive a $14 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 $115,250.00 Salary $7,000.00 $2,800.00 620.00 Anthony 5,700.00 Salary 660.00 112.00 33.00 36.00 66.00 Nichole 16,600.00 Regular 80 142.00 Overtime 10 41.00 Zoey 6,650.00 Regular 80 132.00 Overtime 6 38.00 Gracie 5,250.00 Regular 77 1,078.00 122.00 Overtime 37.00 Totals $149,450.00 $3,308.00 $0.00 $0.00 $0.00 $33.00 $0.00 772.00 0.00 0.00 0.00 66.00

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

	Employee	Cumulative Pay (Excludes Current Period)	Current Period Gross Pay			FIT Withholding A	FUTA	FICA S.S. Employee C	FICA Medicare Employee D	Employee Plan Withholding E	Employee Net Pay G-A-B-C-D-E
			Pay Type	Pay Hours	Gross Pay G	SIT Withholding B	SUTA	FICA S.S. Employer	FICA Medicare Employer	Employer Plan Expense G*5%
	Kathleen	$115,250.00	Salary		$7,000.00	$2,800.00	0	201.5	101.5	$350.00	$2,927.00
						620	0	201.5	101.5	$700.00
	Anthony	5,700.00	Salary		660	112	3.96	40.92	9.57	$33.00	$428.51
						36	35.64	40.92	9.57	$66.00
	Nichole	16,600.00	Regular	80	1120	142	0	82.46	19.285	$66.50	$978.76
			Overtime	10	210	41	0	82.46	19.285	$133.00
	Zoey	6,650.00	Regular	80	1120	132	2.1	77.25	18.07	$62.30	$918.38
			Overtime	6	126	38	18.9	77.25	18.07	$124.60
	Gracie	5,250.00	Regular	77	1,078.00	122	6.47	66.84	15.63	$53.90	$782.63
			Overtime			37	58.21	66.84	15.63	$107.80
	Totals	$149,450.00				3308	12.53	468.97	164.05	565.70
					$11,314.00	772	112.75	468.97	164.05	1131.40	6035.28
	WORKING
			Gross salaries G	FICA SS Salaries F	SS taxes F*6.2%	Medicare Taxes G*1.45%	Salaries for FUT and SUTA S	FUTA .6%*S	SUTA	Employee Plan Withholding G*5%	Employer Plan Expense G*5%*2
	Kathleen	115250	7000	3250	201.5	101.5	0	0	0	350	700
				(118500-115250)
	Anthony	5700	$660	$660	40.92	9.57	660	3.96	35.64	33	66
	Nichole	16600	1330	$1,330	82.46	19.29	0	0	0	66.5	133
			(80*14)+(10*14*1.5)
	Zoey	6650	1246	$1,246	77.25	18.07	350	2.1	18.9	62.3	124.6
			(80*14)+(6*14*1.5)				(7000-6650)
	Gracie	5250	1078	$1,078	66.84	15.63	1078	6.47	58.21	53.9	107.8
			(77*14)
	Total		11314	7564	468.97	164.05	2088.00	12.53	112.75	565.70	1131.40
	Accounts Title	Dr	Cr
b	Salaries expenses	11314
	Federal Income Tax payable		3308
	State Income Tax payable		772
	Social Security taxes payable		468.97
	Medicare taxes payable		164.05
	Employee Plan withholding payable		565.70
	Salaries payable		6035.28
c	Salaries payable	6035.28
	Cash		6035.28
d	Payroll tax expenses	1889.70
	Social Security taxes payable		468.97
	Medicare taxes payable		164.05
	Employer Plan withholding payable		1131.40
	Federal Unemployment Taxes payable		12.53
	State Unemployment Taxes payable		112.75
e	Federal Income Tax payable	3308
	State Income Tax payable	772
	Social Security taxes payable	937.94
	Medicare taxes payable	328.11
	Employee Plan withholding payable	565.70
	Employer Plan withholding payable	1131.40
	Federal Unemployment Taxes payable	12.53
	State Unemployment Taxes payable	112.75
	Cash		7168.42

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