Lenny Worthington is general manager of United Salons. During 2018, Worthington worked for the company all year at a $13,200 monthly salary. He also earned a year-end bonus equal to 5% of his annual salary. Worthington's federal income tax withheld during 2018 was $1.980 per month, plus United incurred payroll tax expense on Worthington for FICA tax. The company also paid unemployment tax and federal unemployment tax. state (Click the icon to view payroll tax rate information.) $1,584 on his bonus check. State income tax withheld came to $110 per month, plus $40 on the bonus. FICA tax was withheld on the annual earnings. Worthington authorized the following payroll deductions: Charity Fund contribution of 3% of total earnings and life insurance of $20 per month. Read the requirements
Requirements 1. Now compute Worthington's payroll deductions and net pay for the year. (Round all amounts to the nearest dollar.) Net pay: More Info 186320 Gross pay Withholding deductions: Federal income tax 25344 For all payroll calculations, use the following tax rates and round amounts to the nearest cent Employee OASDI tax 7316 Employee OASDI: 6.2% on first $118,500 earned; Medicare: 1.45% up to S200,000, 2.35 % on earnings above $200,000. OASDI: 6.26 on first $118,500 earned; Medicare: 1.45% on all earnings; FUTA: 0.6 % on first $7,000 earned; SUTA: 5.4% on first $7,000 earned. Employee Medicare tax 2412 State income tax 1360 Employer: Charity fund contribution 4990 160 Life insurance 41582 Total withholdings Print Done 124738 Net (take-home) pay
Requirement 2. Compute United's total 2018 payroll tax expense for Worthington. (Round all amounts to the nearest dollar.) Gross pay 166320 Employer Payroll Taxes: FICA-OASDI 7316 FICA-Medicare 2412 SUTA 378 42 FUTA 10148 Total Employer Payroll Tax 176468 Total Payroll Expense
Requirement 3. Make the journal entry to record United's expense for Worthington's total earnings for the year, his payroll deductions, and net pay. Debit Salaries Expense and Bonus Expense as appropriate. Credit liability accounts for the payroll deductions and Cash for net pay. An explanation is not required. (Record debits first, then credits. Exclude explanations from journal entries.) Date Accounts Debit Credit 158400 Salaries Expense Bonus Expense 7920 Employee Federal Income Taxes Payable 25344 FICA-Medicare Taxes Payable 2412 FICA-OASDI Taxes Payable 7316 Employee Federal Income Taxes Payable 1380 Charity Fund Payable 4990 Life Insurance Payable 180 Cash 124738 X
Requirement 4. Make the journal entry to record the accrual of United's payroll tax expense for Worthington's total earnings. (Record debits first, then credits. Exclude explanations from journal entries.) Date Accounts Debit Credit Payroll Tax Expense 10148 State Unemployment Taxes Payable 378 Federal Unemployment Taxes Payable 42 FICA-Medicare Taxes Payable 2412 FICA-OASDI Taxes Payable 7316
Requirement 5. Make the journal entry for the payment of the payroll withholdings and taxes. (Record debits first, then credits. Exclude explanations from journal entries.) Date Accounts Debit Credit