Below is a payroll sheet for Otis Import Company for the month of September 2014

Question

Below is a payroll sheet for Otis Import Company for the month of September 2014. The company is allowed a 1% unemployment compensation rate by the state; the federal unemployment tax rate is 0.8% and the maximum for both is $7,000. Assume a 10% federal income tax rate for all employees and a 7.65% FICA tax on employee and employer on a maximum of $113,700. In addition, 1.45% is charged both employer and employee for an employee’s wages in excess of $113,700 per employee.

Complete the payroll sheet . (Round answers to 2 decimal places, e.g. 15.25.)

Unemployment Tax

Name

Earnings
to Aug. 31

September
Earnings      

   Income Tax
Withholding

    FICA

     State

Federal

Make the necessary entry to record the payment of the payroll. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

Unemployment Tax

Name

Earnings
to Aug. 31

September
Earnings      

   Income Tax
Withholding

    FICA

     State

Federal

B.D. Williams $6,810 $800 D. Raye 6,470 700 K. Baker 7,710 1,300 F. Lopez 13,500 1,900 A. Daniels 107,000 13,800 B. Kingston 111,610 17,400 Total $253100 $35900

Explanation / Answer

1)

Working

B.D. Williams

Income TaxWithholding = 800*10% = 80

FICA = 800*7.65% = 61.20

SUTA = (7000-6810)*1% = 1.90

FUTA = (7000-6810)*0.8% = 1.52

D. Raye

Income TaxWithholding = 700*10% = 70

FICA = 700*7.65% = 53.55

SUTA = (7000-6470)*1% = 5.30

FUTA = (7000-6470)*0.8% = 4.24

K. Baker

Income TaxWithholding = 1300*10% = 130

FICA = 1300*7.65% = 99.45

F. Lopez

Income TaxWithholding = 1900*10% = 190

FICA = 1900*7.65% = 145.35

A. Daniels

Income TaxWithholding = 13800*10% = 1380

FICA = (113700-107000)*7.65% + ( 107000+13800-113700)*1.45% = 615.50

B. Kingston

Income TaxWithholding = 17400*10% = 1740

FICA = (113700-111610)*7.65% + ( 111610+17400-113700)*1.45% = 381.88

Make the necessary entry to record the payment of the payroll.

Unemployment Tax Name Earnings to Aug. 31 September Earnings       Income TaxWithholding     FICA      State Federal B.D. Williams 6810 800 80          61.20                     1.90                                      1.52 D. Raye 6470 700 70          53.55                     5.30                                      4.24 K. Baker 7710 1300 130          99.45                          -                                             -   F. Lopez 13500 1900 190        145.35                          -                                             -   A. Daniels 107000 13800 1380        615.50                          -                                             -   B. Kingston 111610 17400 1740        381.88                          -                                             -   Total 253100 35900 3590    1,356.93                     7.20                                      5.76

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