Chapter 11-Group Problem Logan White is general manager of valuepoint Salons, ou

Question

Chapter 11-Group Problem Logan White is general manager of valuepoint Salons, ouring 2018, white worked for th Walsh's federal income tax withheld during 2018 was $1,360 per month, plus $4,826 for the year on l sala year at a S 13,600 monthly salary. He also earned a year-end bonus equal to 15% of henna bonus. State income tax withheld came to $150 per was withheld on the annual earnings (salary and bonus). Walsh authorized the following deductions: Charity Fund contribution of 1% of total earnings and life insurance of$40 per month. month, plus $60 for the year on his bonus. FICA tax Valuepoint Salons incurred payroll tax expense on White for FICA tax. The company also paid state unemployment tax and federal unemployment tax. the year 2018. Round all amounts to 1. Compute White's gross pay, payroll deductions, and net pay the nearest dollar. Annual Calculation of Annual Amounts Gross Pay: Salary Bonus Total Gross Pay Deductions: Federal Income Tax State Income Tax FICA-OASDI FICA-Medicare Charity Fund Life Insurance 0x12 Total Net Pay 2. Make the journal entry to record Valuepoint's expense for White's earnings for the year, his deductions, and his net pay. Debit Salaries Expense for salary and Bonus Expense for the bonus. Assume his net pay was paid to him in a check on December 31. Accounts and Explanation Debit Credit Date 018 Salaries expenses Dec. 31 xra Credirt

Explanation / Answer

Employee Logan White For the Year Ended December 31, 2018 Salary earnings ($13,600 × 12) $163,200 Bonus ($163,200 × .15)              24,480         Total gross pay $187,680 Deductions: Federal income tax [($1,360 × 12) + $4,876] $21,196 State income tax [(150 x 12) + $60] 1,860 FICA - OASDI (118,500* x .062) 7,347 FICA - Medicare (187,680 x .0145) 2,721 Charity Fund ($187,680 × .01) 1876.8 Life insurance ($40 × 12) 480 Total deductions 35,481          Total net pay $152,199 * It is 2016 maximum FICA-OASdI Limit, Limit for 2017 is $127,200, and 2018 is $128,700 Journal Entry DATE ACCOUNTS AND EXPLANATIONS POST. DEBIT CREDIT REF. Salary expense 163,200 Bonus expense 24,480 FICA—OASDI Taxes Payable 7,347 FICA—Medicare Taxes Payable 2,721 Employee federal income tax payable 21,196 Employee state income tax payable 1,860 Employee payable to charity fund 1,877 Employee life insurance payable 480 Cash 152,199 Employee payroll taxes: Calculation Annual amount FICA-OASDI (118,500 x 6.2%) $       7,347 FICA-Medicare (187,680 x 1.45%) $       2,721 FUTA (7,000 x 0.8%) $           56 SUTA (7,000 x 5.4%) $          378 Total Employer Payroll tax $     10,502 Journal Entry DATE ACCOUNTS AND EXPLANATIONS POST. DEBIT CREDIT REF. Payroll Tax Expense 10,502 FICA—OASDI Taxes Payable 7,347 FICA—Medicare Taxes Payable 2,721 Federal Unemployment Taxes Payable 56 State Unemployment Taxes Payable 378

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