Lightning Electronics is a midsize manufacturer of lithium batteries. The compan
ID: 2476415 • Letter: L
Question
Lightning Electronics is a midsize manufacturer of lithium batteries. The company’s payroll records for the November 1–14 pay period show that employees earned wages totaling $56,000 but that employee income taxes totaling $8,200 and FICA taxes totaling $2,925 were withheld from this amount. The net pay was directly deposited into the employees’ bank accounts. Assume Lightning Electronics must also pay $310 of unemployment taxes for this pay period.
Record the wages expense for November 1-14 time period, including payroll deductions.
Record the payroll tax expense.
Lightning Electronics is a midsize manufacturer of lithium batteries. The company’s payroll records for the November 1–14 pay period show that employees earned wages totaling $56,000 but that employee income taxes totaling $8,200 and FICA taxes totaling $2,925 were withheld from this amount. The net pay was directly deposited into the employees’ bank accounts. Assume Lightning Electronics must also pay $310 of unemployment taxes for this pay period.
Record the wages expense for November 1-14 time period, including payroll deductions.
Record the payroll tax expense.
Explanation / Answer
Answer :
Net Pay = $ 44,875
Payroll Cost = $ 59,235
Explanation:
(a)
Employees - Net pay Calculation
Gross salaries & wages
$
56,000
Employee income tax withheld
-8,200
Employee FICA withheld
-2,925
Net Pay
$
44,875
(b)
Total payroll costs would include the gross pay ($56,000) as well as the additional employer payroll taxes ($2,925 FICA) and unemployment taxes ($310). In total, Lightning Electronics would report $59,235 as the total payroll cost for this pay period.
Employees - Net pay Calculation
Gross salaries & wages
$
56,000
Employee income tax withheld
-8,200
Employee FICA withheld
-2,925
Net Pay
$
44,875
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