Liam Wallace is general manager of moonwalk salons. during 2016 while this works

Question

Liam Wallace is general manager of moonwalk salons. during 2016 while this works for the company all year at a $13600 monthly salary he also earned a year end bonus = 15% of his annual salary. Wallace's federal income tax withheld during 2016 was $952 per month plus $3672 on his bonus check. state income tax withheld came to a $150 per month plus $90 on bonuses. FICA tax was withheld on annual earnings. Wallace authorized the following payroll deductions charity fund contribution of 3% of total earnings and life insurance of $50 per month.

1. Compute Wallace's gross pay, payroll deductions, and net pay for the full year 2016. Round all amounts to the nearest dollar 2. Compute Moonwalk's total 2016 payroll expense for Wallace 3. Make the journal entry to record Moonwalk's expense for Wallace'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 4. Make the journal entry to record the accrual of Moonwalk's payroll tax expense for Wallace's total earnings. Print Done

Explanation / Answer

1 Gross Pay: Salary ($13600 x 12) 163200 Bonus (15% x $163200) 24480 Gross Pay 187680 Net Pay: Gross Pay 187680 Withholding deductions: FICA-Social security tax (6.2% x 117000) 7254 FICA-Medicare tax (1.45% x $187680) 2721.36 Federal income tax [($952 x 12) + $3672] 15096 State income tax [($150 x 12) + $90] 1890 Charity Fund contribution (3% x $187680) 5630.40 Life insurance contribution ($50 x 12) 600 Total deductions 33191.76 Net Pay 154488.24 2 Total 2016 payroll expense for Wallace: Gross pay 187680 Employer's FICA-Social security tax 7254 Employer's FICA-Medicare tax 2721.36 FUTA (0.6% x $7000) 42 SUTA (5.4% x $7000) 378 Total payroll expense 198075.36 3 Account Debit Credit Salaries expense 163200 Bonus expense 24480 FICA-Social security tax payable 7254 FICA-Medicare tax payable 2721.36 Federal income tax payable 15096 State income tax payable 1890 Charity Fund contribution payable 5630.40 Life insurance contribution payable 600 Cash 154488.24 4 Account Debit Credit Payroll tax expense 10395.36 FICA-Social security tax payable 7254 FICA-Medicare tax payable 2721.36 FUTA payable 42 SUTA payable 378

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