Question

Below is a payroll sheet for Otis Import Company for the month of September 2018. The
company is allowed a		5.40%	unemployment compensation rate by the state; the federal unemployment
tax rate is	0.60%	and the maximum for both is		$9,000	. Assume a	12%	federal
income tax rate for all employees and a			7.65%	FICA tax on employee and employer on a maximum of
$128,400	. In addition,	1.45%	is charged both employer and employee for an employee’s wages in excess
of	$128,400	per employee.
Name	Earnings to Aug 31	September Earnings	Income Tax Withholding	F.I.C.A.	State U.C.	Federal U.C.
B.D. Williams	$8,600	$800
D. Raye	8,100	700
K. Baker	9,800	1,100
F. Lopez	13,600	1,900
A. Daniels	119,000	12,000
B. Kingston	123,000	18,000
Instructions:
(a) Complete the payroll sheet and make the necessary entry to record the payment of the payroll.
Name	Earnings to Aug. 31	September Earnings	Income Tax Withholding	FICA	State U.C.	Federal U.C.
B.D. Williams	$8,600	$800	5
D. Raye	8,100	700	4
K. Baker	9,800	1,100	7
F. Lopez	13,600	1,900	11
A. Daniels	119,000	12,000	72
B. Kingston	123,000	18,000	108
Total	$282,100	$34,500	$207	$0	$0	$0
Journal entry"
(b) Make the entry to record the payroll tax expenses of Otis Import Company.
Journal entry:
(c) Make the entry to record the payment of the payroll liabilities created. Assume that the company pays all payroll liabilities at the end of each month.
								Journal entry:

Answer 1

Part (a)
Name	Earnig to Aug.31	Sep. Earnings	Income Tax withholdings	FICA	State U.C.	Federal U.c.
B.D. Williams	$                    8,600	$                      800	$                           96	$                 61.20	$                      21.60	$               2.40
D. Raye	$                    8,100	$                      700	$                           84	$                 53.55	$                      48.60	$               5.40
K. Baker	$                    9,800	$                   1,100	$                         132	$                 84.15	$                             -	$                    -
F. Lopez	$                  13,600	$                   1,900	$                         228	$              145.35	$                             -	$                    -
A. Daniels	$                119,000	$                12,000	$                     1,440	$              620.50	$                             -	$                    -
B. Kingston	$                123,000	$                18,000	$                     2,160	$              517.50	$                             -	$                    -
Total	$                282,100	$                34,500	$                     4,140	$                 1,482	$                            70	$                     8
Caculation of FICA				Calculation of State U.C.
B.D. Williams	800*7.65%	$                   61.20		B.D. Williams	(9000-8600)*5.40%	21.6
D. Raye	700*7.65%	$                   53.55		D. Raye	(9000-8100) * 5.40%	48.6
K. Baker	1100*7.65%	$                   84.15
F. Lopez	1900*7.65%	$                145.35		Calculation of Federal U.C.
A. Daniels	[((128400-1190000)*6.2%) + ((119000+12000-128400)*1.45%)]	$                620.50		B.D. Williams	(9000-8600)*0.60%	2.4
B. Kingston	[((128400-1230000)*6.2%) + ((123000+18000-128400)*1.45%)]	$                517.50		D. Raye	(9000-8100) * 0.60%	5.4 Journal Entry a. Wages & Salary expenses $ 34,500.00          To Withholding Tax Payable $    4,140.00           To FICA taxes Payable $    1,482.25           To Cash $ 28,877.75 (to record the paymat of the payroll) b. Payroll Tax Expenses $    1,560.25            To FICATaxes Payable $    1,482.25             To State U.C. Taxex Payable $          70.20            To Federal U.C. Taxes Payable $            7.80 (to record the payroll taxes of Otis Import Company c. Withholding Tax Payable $    4,140.00 FICA taxes Payable $    1,482.25 State U.C. Taxex Payable $          70.20 Federal U.C. Taxes Payable $            7.80               To cash $    5,700.25 (to record the payment of the payroll liabilities created)