Check my work Serial Problem Business Solutions LO P2, P3, C2 Following are some

Question

Check my work Serial Problem Business Solutions LO P2, P3, C2 Following are some transactions and events of Business Solutions. Feb. 26 The company paid cash to Lyn Addie for ei company 8old merchandise with a 2,012 cost for $2,980 on credit to ildcat services , invoice dated Hareh 25. Required 1. Assume that Lyn Addie is an unmarried employee. Her $1,040 of wages are subject to no deductions other than FICA Social Security taxes, FICA Medicare taxes, and federal income taxes. Her federal income taxes for this pay period total $104. Compute her net pay for the eight days' work paid on February 26. (Round your answer to 2 decimal places. Do not round intermedlate calculations.) 2. Record the journal entry to reflect the payroll payment to Lyn Addie as computed in part 1. (Round your answers to 2 decimal places. Do not round intermediate calculations.) View on list ournal entry worksheet

Explanation / Answer

1.

Social security tax rate is 6.2% and Medicare tax rate is 1.45% on gross pay for the year 2018.

Gross pay = Rate × Number of days = $130 × 8 = $1,040.

Social security tax = Gross pay × 6.2% = $1,040 × 6.2% = $64.48

Medicare tax = Gross pay × 1.45% = $1,040 × 1.45% = $15.08

Income tax = $104

Net pay = Gross pay – Social security tax – Medicare tax

            = $1,040 - $64.48 - $15.08 - $104

            = $856.44 (Answer)

2.

Journal

Date

Accounts titles and explanation

P.ref

Debit

Credit

26/2/18

Salaries and wages Expense

$1,040

Social security tax

$64.48

Medicare tax

$15.08

Income tax

$104

Cash

$856.44

To record payment to L.A for her work

3.

FUTA = Gross pay × 0.6% = $1,040 × 0.6% = $6.24

SUTA = Gross pay × 4% = $1,040 × 4% = $41.60

Journal

Date

Accounts titles and explanation

P.ref

Debit

Credit

26/2/18

Payroll tax expense

$127.40

Social security tax

$64.48

Medicare tax

$15.08

FUTA

$6.24

SUTA

$41.60

To record employer’s payroll tax expense

4.

Sale tax is chargeable on sales revenue.

Sales tax amount = Sales revenue × Rate = $2,980 × 4% = $119.20

Journal

Date

Accounts titles and explanation

P.ref

Debit

Credit

25/3/18

Accounts receivable

$3,099.20

Sales revenue

$2,980

Sales tax payable

$119.20

To record March sales together with 4% sales tax

Date

Accounts titles and explanation

P.ref

Debit

Credit

26/2/18

Salaries and wages Expense

$1,040

Social security tax

$64.48

Medicare tax

$15.08

Income tax

$104

Cash

$856.44

To record payment to L.A for her work

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.