Question

Nashville Publishing Company pays its employees monthly. Payments made by the company on October 31, 2019, follow. Cumulative amounts paid to the persons named prior to October 31 are also given.

Paul Parker, president, gross monthly salary of $20,000; gross earnings prior to October 31, $160,000.

Carolyn Wells, vice president, gross monthly salary of $15,000; gross earnings paid prior to October 31, $150,000.

Michelle Clark, independent accountant who audits the company’s accounts and performs consulting services, $16,500; gross amounts paid prior to October 31, $42,500.

James Wu, treasurer, gross monthly salary of $6,000; gross earnings prior to October 31, $60,000.

Payment to Editorial Publishing Services for monthly services of Betty Jo Bradley, an editorial expert, $6,000; amount paid to Editorial Publishing Services prior to October 31, 2019, $34,000.

Required:

Use an earnings ceiling of $122,700 for social security taxes and a tax rate of 6.2 percent and a tax rate of 1.45 percent on all earnings for Medicare taxes. Prepare a schedule showing the following information:

Each employee’s cumulative earnings prior to October 31.

Each employee’s gross earnings for October.

The amounts to be withheld for each payroll tax from each employee’s earnings; the employee’s income tax withholdings are Paul Parker, $5,600; Carolyn Wells, $4,200; James Wu, $1,320.

The net amount due each employee.

The total gross earnings, the total of each payroll tax deduction, and the total net amount payable to employees.

Prepare the general journal entry to record the company’s payroll on October 31.

Prepare the general journal entry to record payments to employees on October 31.

Answer 1