Queston #7 Please assist! Note: For this edition, the 2014 federal income tax ta
ID: 2476423 • Letter: Q
Question
Queston #7
Please assist!
Note: For this edition, the 2014 federal income tax tables, FICA rates, OASDI rate of 6.2% on wages up to $117,000 and the employee and employer HI rate of 1.45% on all wages was used.
Unless instructed otherwise, click here to calculate hourly rate and overtime rates.
Olney Company is a small manufacturing firm located in Allentown, Pennsylvania. The company has a workforce of both hourly and salaried employees. Each employee is paid for hours actually worked during each week, with the time worked being recorded in quarter-hour increments. The standard workweek consists of 40 hours, with all employees being paid time and one-half for any hours worked beyond the 40 regular hours.
Wages are paid every Friday, with one week’s pay being held back by the company. Thus, the first payday for Olney Company is January 14 for the workweek ending January 8 (Saturday).
Below is the information provided from the payroll register of Olney Company, Inc.
a. Prepare the journal entries as of January 12 to record the payroll and the payroll taxes for the week ending January 8. Credit Salaries Payable for the total net pay.
Use the following tax rates and bases: employer’s FICA—OASDI, 6.2% on the first $117,000; employer’s FICA—HI, 1.45% on total earnings; FUTA, 0.6% on the first $7,000; and SUTA, 3.6785% on the first $8,500.
If an amount box does not require an entry, leave it blank. If required, round your answers to the nearest cent.
b. Prepare the journal entry to record the payment of the payroll on January 14 when the paychecks are distributed to all workers. If required, round your answers to the nearest cent.
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The total deductions for employees' payroll is shown below. OASDI $597.68 HI 139.77 FIT 783.30 SIT 295.96 SUTA 6.76 CIT 128.19 Simple deductions 440.00 Group insurance 6.80 Health insurance 16.50 Total deductions 2,414.96Explanation / Answer
Solution.
a)
b)
Debit $ Credit $ Jan 20 Wages & Salaries 9639.80 OASDI Tax Payable 597.68 HI Tax Payable 139.77 FIT Tax Payable 783.30 SIT Tax Payable 295.96 SUTA Tax Payable 6.76 CIT Tax Payable 128.19 Simple deductions 440.00 Group insurance 6.80 Health insurance 16.50 Salaries Payable 7224.84Related Questions
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