Question

Mary Stine’s regular hourly wage rate is $12, and is paid one and one-half times her regular rate for any hours which exceed 40 hours per week. During a March pay period, Mary works 47 hours. Mary’s federal income tax withholding is $70, the applicable FICA tax rate is 8%, there is no state income tax and she has no voluntary deductions.

(a) Compute Mary Stine’s gross earnings and net pay for the pay period.

Gross earnings:

         Regular pay                                                                                                   __________        

         Overtime pay                                                                                       +       __________        

Gross earnings                                                                                                       __________                    

Less:    FICA taxes payable (Social Security & Medicare)                   _(_______)_

           

            Federal income taxes payable                                      _(________)_     _(________)_

Net pay                                                                                                            =______________

(b) Prepare the journal entry to record Mary’s pay, including taxes, for the period (use March 15 as date of the entry).                                                                    Dr.                   Cr.

(c) Additionally, in March, gross earnings for the company Mary is employed with totaled $50,000. All earnings ($50,000) are subject to 8% FICA taxes, 5.4% state unemployment taxes, and 0.8% federal unemployment taxes. Prepare the entry to record payroll tax expense for Mary’s employer for the month of March (use March 31 as date of entry).

                                                                                                            Dr.                   Cr.

Answer 1

(A) Calculation of Mary stine's gross earnings and net payment

Regular pay (40 hours per week ×$12/per hour)   = 480

Add:Overtime pay (7 hours per week ×$12×1.5 times) =126

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Gross earnings 606

Less: FICA taxes payable (606×8%) (48.48)

Less:Federal income taxes with holding (70)

----------------

Net pay 487.52

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(B) Journal entry to record Mary pay Including taxes

On March 15th

Gross pay a/c Dr. 606

To FICA taxes payable a/c 48.48

To Federal income taxes payable a/c 70

To Pay roll expenses payable a/c 487.52

(Being recording of payroll expenses and all taxes due)

Pay roll expenses a/c Dr. 487.52

To cash a/c 487.52

(Being pay roll expenses paid )

FICA taxes payable a/c Dr. 48.48

Federal income taxes payable a/c Dr. 70

To Cash 118.48

(Being all taxes paid through cash )

(C) Recording of journal entry based on gross pay of $50000

Gross pay a/c Dr.50000

To FICA taxes payable a/c 4000

To state unemployment taxes payable a/c 2700

To Federal unemployment taxes payable a/c 400

To Payroll expenses payable a/c(net pay) 42900

(Being Gross pay Including taxes payable )

Payroll expenses a/c Dr. 42900

To Cash a/c 42900

(Being payroll expenses payables are paid )

FICA taxes payable a/c Dr. 4000

state unemployment taxes payable a/c Dr. 2700

Federal unemployment taxes payable a/c Dr. 400

To Cash a/c 7100

(Being All taxes dues has been paid through cash)