Computing and recording gross and net pay Henry Striker manages a Frosty Boy dri

Question

Computing and recording gross and net pay

Henry Striker manages a Frosty Boy drive-in. his straight-time pay is $10 per hour, with time-and-a-half for hours in excess of 40 per week. Striker’s payroll deductions include withheld income tax of 8% , FICA tax, and a weekly deduction of $5 for a charitable contribution to United Way. Striker worked 52 hours during the week.

Requirements

Compute Striker’s gross pay and net pay for the week. Assume earnings to date are $10,000

Journalize Frosty Boy’s wages expense accrual for Striker’s work. An explanation is not required.

Journalize the subsequent payment of wages to striker

Explanation / Answer

Overtime rate per hour is one and half of actual hour rate.

Normage per hour rate = $ 10 per hor

Overtime rate per hour = 1.5 * $ 10 per hour = $ 15

Gross Pay = 40*10 +12*15

= $ 580

Gross Pay 580

Less FICA tax (8% of $580) 47

Less charitable contribution 5

Net pay 528

Journal entry

Wages exp dr 580

Wages exp o/s 528

Income tax (FICA tax) 47

Charitable contribution (voluntary distribution) 5

Wages o/s 528

cash 528

(being wages paid)

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