Et Erin Berge\'s regular hourly wage rate is S 18, and she receives a wage of 1%

Question

Et Erin Berge's regular hourly wage rate is S 18, and she receives a wage of 1% times the regular hourly rate for work in excess 40 hours. During a March weekly pay period, Erin worked 42 hours. Her gross earnings prior to the current week were $6,000.Er is married and claims three withholding allowances. Her only voluntary deduction is for group hospitalization insurance at $20 p week. Assume federal income tax withheld is $76. Instructions a. Compute the following amounts for Erin's wages for the current week 2-FICA taxes (based on a 7.65% rate). 3, State income taxes withheld (based on a 3% rate). 4. Net pay. b. Record Erin's pay Journal Entry. E-2 Charlene Tilson and Jade Petricka decide to organize the Petson partnership. Tilson invests $15,000 cash, and Petri contributes $12.000 cash and two assets from her sole proprietorship (accounts receivable $9,000 less allowance for doub accounts $I,000, and land having a book value of $7,000). Instructions Prepare the entry to record the investment in the partnership, assuming the net realizable value of the receivables is $7.500 and land has a fair value of $10,000. E-3 Matt & Daveson Co. reports net income of $51,000. Interest allowances are Matt $8,000 and Daveson $10,000, sal allowances are Matt $30,000 and Daveson $20,000, and the remainder is shared equally. Show the division of net income. E-4 The partners of LR Company have decided to liquidate their business. Noncash assets were sold for $125,000. The ince ratios of the partners Cisneros, Gunselman, and Forren are 3:2:3, respectively. Complete the following schedule of cash payments for LR Company Compan Cisneros, Gunselman, ltem Cash + Assets-Liabilities+CapitalCapital 2 Balances before liquidation 15,000 $0,00040,00020,000 32,000 13,000 Sale of noncash asets New balances New belances 4 t Final balances

Explanation / Answer

E-1. a 1 Gross Earnings 40 hours @ $18 per hour $720 2 hours @ $27 per hour $54 Total $774 2. FICA taxes ($774 x 7.65%) $59.21 3. State income taxes withheld ($774 x 3%) $23.22 4. Net pay Gross Earnings $774 Less: FICA taxes $59.21 State income taxes withheld $23.22 Federal income taxes withheld $76 Group hospitalization insurance $20 Total deductions $178.43 Net pay $595.57 b. Journal entry for Erin's pay Salaries and wages expense $774 Federal income taxes withheld $76 State income taxes withheld $23.22 FICA taxes $59.21 Group hospitalization insurance $20 Wages payable $595.57 E-2. Journal entry to record investment in partnership Cash (15000+12000) $27,000 Accounts receivable $9,000 Land $10,000 Allowance for doubtful accounts $1,500 Tilson's capital $15,000 Petson's capital (12000+7500+10000) $29,500 E-3. Division of net income Matt Daveson Total Interest allowance $8,000 $10,000 $18,000 Salary allowance $30,000 $20,000 $50,000 Total salaries and interest $38,000 $30,000 $68,000 Remaining income (17000) (51000-68000) Matt (17000 x 50%) ($8,500) Daveson (17000 x 50%) ($8,500) Total remainder ($17,000) Total division of net income $29,500 $21,500 $51,000 E-4. Schedule for Cash Payments Items Cash Non cash assets Liabilities Cisneros' capital Gunselamn' capital Forren's capital Balances before liquidation $15,000 $90,000 $40,000 $20,000 $32,000 $13,000 Sale of noncash assets and allocation of gain $125,000 ($90,000) $13,125 $8,750 $13,125 New Balances $140,000 $0 $40,000 $33,125 $40,750 $26,125 Pay liabilities ($40,000) ($40,000) New Balances $100,000 $0 $0 $33,125 $40,750 $26,125 Cash distribution to partners ($100,000) ($33,125) ($40,750) ($26,125) Final Balance $0 $0 $0 $0 $0 $0

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