Brief Exercise 10-6 Susan Braun?s regular hourly wage rate is $34, and she recei

Question

Brief Exercise 10-6 Susan Braun?s regular hourly wage rate is $34, and she receives an hourly rate of $51 for work in excess of 40 hours. During a January pay period, Susan works 48 hours. Susan's federal income tax withholding is S87, and she has no voluntary deductions. Assume that the FICA tax rate is 7.65%. Prepare the employer's journal entries to record (a) Susan?s pay for the period and (b) the payment of Susan's wages. Use January 15 for the end of the pay period and the payment date. (Round answers to 2 decimal places, e.g. 15.25. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Explanation / Answer

To pass the journal entries, we need to calculate the net pay of Susan Braun. Net pay is the difference between gross earnings, tax withheld and FICA. The net pay for Susan has been calculated as follows:

Gross Earnings = 34*40 + 51*(48 - 40) = $1,768

Net Pay = 1,768 - 87 - 7.65%*1,768 = $1,545.75

__________

The first journal entry would involve accrual of salary and wages payable to Susan. We will record the gross salaries and wages, federal income tax withheld, FICA and net amount payable. The second journal entry would result in cash outflow on account of payment of net salaries and wages payable to Susan.

The journal entries are as follows:

No. Date Account Titles and Explanation Debit Credit a Jan.15 Salaries and Wages Expense $1,768 Federal Income Taxes Payable $87 FICA Taxes Payable (1,768*7.65%) $135.25 Salaries and Wages Payable $1,545.75 b Jan.15 Cash (1,768 - 87 - 135.25) $1,545.75 Salaries and Wages Payable $1,545.75

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

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