Below is a payroll sheet for Otis Import Company for the month of September 2018

Question

Below is a payroll sheet for Otis Import Company for the month of September 2018. The company is allowed a 5.40% unemployment compensation rate by the state; the federal unemployment tax rate is 0.60% and the maximum for both is $9,000 . Assume a 12% federal income tax rate for all employees and a 7.65% FICA tax on employee and employer on a maximum of $128,400 . In addition, 1.45% is charged both employer and employee for an employee’s wages in excess of $128,400 per employee. Name Earnings to
Aug 31 September
Earnings Income Tax
Withholding F.I.C.A. State
U.C. Federal
U.C. B.D. Williams $8,600 $800 D. Raye 8,100 700 K. Baker 9,800 1,100 F. Lopez 13,600 1,900 A. Daniels 119,000 12,000 B. Kingston 123,000 18,000 Instructions: (a) Complete the payroll sheet and make the necessary entry to record the payment of the payroll. Name Earnings to Aug. 31 September Earnings Income Tax Withholding FICA State U.C. Federal U.C. B.D. Williams $8,600 $800 5 D. Raye 8,100 700 4 K. Baker 9,800 1,100 7 F. Lopez 13,600 1,900 11 A. Daniels 119,000 12,000 72 B. Kingston 123,000 18,000 108      Total $282,100 $34,500 $207 $0 $0 $0 Journal entry" (b) Make the entry to record the payroll tax expenses of Otis Import Company. Journal entry: (c) Make the entry to record the payment of the payroll liabilities created. Assume that the company pays all payroll liabilities at the end of each month. Journal entry: Below is a payroll sheet for Otis Import Company for the month of September 2018. The company is allowed a 5.40% unemployment compensation rate by the state; the federal unemployment tax rate is 0.60% and the maximum for both is $9,000 . Assume a 12% federal income tax rate for all employees and a 7.65% FICA tax on employee and employer on a maximum of $128,400 . In addition, 1.45% is charged both employer and employee for an employee’s wages in excess of $128,400 per employee. Name Earnings to
Aug 31 September
Earnings Income Tax
Withholding F.I.C.A. State
U.C. Federal
U.C. B.D. Williams $8,600 $800 D. Raye 8,100 700 K. Baker 9,800 1,100 F. Lopez 13,600 1,900 A. Daniels 119,000 12,000 B. Kingston 123,000 18,000 Instructions: (a) Complete the payroll sheet and make the necessary entry to record the payment of the payroll. Name Earnings to Aug. 31 September Earnings Income Tax Withholding FICA State U.C. Federal U.C. B.D. Williams $8,600 $800 5 D. Raye 8,100 700 4 K. Baker 9,800 1,100 7 F. Lopez 13,600 1,900 11 A. Daniels 119,000 12,000 72 B. Kingston 123,000 18,000 108      Total $282,100 $34,500 $207 $0 $0 $0 Journal entry" (b) Make the entry to record the payroll tax expenses of Otis Import Company. Journal entry: (c) Make the entry to record the payment of the payroll liabilities created. Assume that the company pays all payroll liabilities at the end of each month. Journal entry:

Explanation / Answer

5.4

Journal Entry

Part (a) Name Earnig to Aug.31 Sep. Earnings Income Tax withholdings FICA State U.C. Federal U.c. B.D. Williams $                    8,600 $                      800 $                           96 $                 61.20 $                      21.60 $               2.40 D. Raye $                    8,100 $                      700 $                           84 $                 53.55 $                      48.60 $               5.40 K. Baker $                    9,800 $                   1,100 $                         132 $                 84.15 $                             -   $                    -   F. Lopez $                  13,600 $                   1,900 $                         228 $              145.35 $                             -   $                    -   A. Daniels $                119,000 $                12,000 $                     1,440 $              620.50 $                             -   $                    -   B. Kingston $                123,000 $                18,000 $                     2,160 $              517.50 $                             -   $                    -   Total $                282,100 $                34,500 $                     4,140 $                 1,482 $                            70 $                     8 Caculation of FICA Calculation of State U.C. B.D. Williams 800*7.65% $                   61.20 B.D. Williams (9000-8600)*5.40% 21.6 D. Raye 700*7.65% $                   53.55 D. Raye (9000-8100) * 5.40% 48.6 K. Baker 1100*7.65% $                   84.15 F. Lopez 1900*7.65% $                145.35 Calculation of Federal U.C. A. Daniels [((128400-1190000)*6.2%) + ((119000+12000-128400)*1.45%)] $                620.50 B.D. Williams (9000-8600)*0.60% 2.4 B. Kingston [((128400-1230000)*6.2%) + ((123000+18000-128400)*1.45%)] $                517.50 D. Raye (9000-8100) * 0.60%

5.4

Journal Entry

a. Wages & Salary expenses $ 34,500.00          To Withholding Tax Payable $    4,140.00           To FICA taxes Payable $    1,482.25           To Cash $ 28,877.75 (to record the paymat of the payroll) b. Payroll Tax Expenses $    1,560.25            To FICATaxes Payable $    1,482.25             To State U.C. Taxex Payable $          70.20            To Federal U.C. Taxes Payable $            7.80 (to record the payroll taxes of Otis Import Company c. Withholding Tax Payable $    4,140.00 FICA taxes Payable $    1,482.25 State U.C. Taxex Payable $          70.20 Federal U.C. Taxes Payable $            7.80               To cash $    5,700.25 (to record the payment of the payroll liabilities created)

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