I am trying to figure out the social security tax for the employees in this prob

Question

I am trying to figure out the social security tax for the employees in this problem, becuase I have to post it all in a chart. I have tried multiplying by the 6.2 tax rate but my program says my answer is wrong. So, is there a different way to calculate social security tax or is there something that I am missing that the problem is asking me to do? I am not looking for answers, but just a clear formula or instruction to get to the right answer.

Nashville Publishing Company pays its employees monthly. Payments made by the company on October 31, 2019, follow. Cumulative amounts paid to the persons named prior to October 31 are also given.

1.Paul Parker, president, gross monthly salary of $20,000; gross earnings prior to October 31, $160,000.

2.Carolyn Wells, vice president, gross monthly salary of $15,000; gross earnings paid prior to October 31, $150,000.

3.Michelle Clark, independent accountant who audits the company’s accounts and performs consulting services, $16,500; gross amounts paid prior to October 31, $42,500.

4. James Wu, treasurer, gross monthly salary of $6,000; gross earnings prior to October 31, $60,000.

5. Payment to Editorial Publishing Services for monthly services of Betty Jo Bradley, an editorial expert, $6,000; amount paid to Editorial Publishing Services prior to October 31, 2019, $34,000.

INSTRUCTIONS

Use an earnings ceiling of $122,700 for social security taxes and a tax rate of 6.2 percent and a tax rate of 1.45 percent on all earnings for Medicare taxes. Prepare a schedule showing the following information:

Each employee’s cumulative earnings prior to October 31.

Each employee’s gross earnings for October.

The amounts to be withheld for each payroll tax from each employee’s earnings; the employee’s income tax withholdings are Paul Parker, $5,600; Carolyn Wells, $4,200; James Wu, $1,320.

The net amount due each employee.

The total gross earnings, the total of each payroll tax deduction, and the total net amount payable to employees.

Prepare the general journal entry to record the company’s payroll on October 31. Use journal page 22. Omit explanations.

Prepare the general journal entry to record payments to employees on October 31.

Explanation / Answer

Nashville Publishing Company S. No. Name of Employee Cumulative amount prior to October 31 Payment made by company on october 31, 2019 Total Social Security Tax Medicare taxes Income tax Total Payroll tax deduction Net amount payable 1 Paul Parker, president 160000 20000 180000 3553 2610 5600 11762.6 168237.4 2 Carolyn Wells, vice president 150000 15000 165000 2623 2392.5 4200 9215.1 155784.9 3 Michelle Clark, independent accountant 42500 16500 59000 855.5 855.5 58144.5 4 James Wu, treasurer 60000 6000 66000 957 1320 2277 63723 5 Betty Jo Bradley, an editorial expert 34000 6000 40000 580 580 39420 63500 510000 6175 7395 11120 24690.2 485309.8 Date Account Debit Credit 31-Oct-19 Salary Expense 63500       Income Tax Payable 11120       Medicare Taxes payable 7395      Social security Tax payable 6175      Cash 38810 To record payroll of empoyees for the month of Octoner, 31 31-Oct-19 Payroll Tax Expense 13570       Medicare Taxes payable 7395      Social security Tax payable 6175 To record employer portion of payroll taxes for the month of Octoner, 31                                                           31-Oct-19 Medicare Taxes payable 14790 Social security Tax payable 12350       Cash 27140 To record employer portion of payroll taxes for the month of Octoner, 31

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