Note: In this chapter and in all succeeding work throughout the course, unless i

Question

Note: In this chapter and in all succeeding work throughout the course, unless instructed otherwise, calculate hourly rates and overtime rates as follows: 1. Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the over-time rate). 2. If the third decimal place is 5 or more, round to the next higher cent. 3. If the third decimal place is less than 5, simply drop the third decimal place. Examples: Monthly rate $1,827 Weekly rate ($1,827 × 12)/52 = $421.615 rounded to $421.62 Hourly rate $421.62/40 = $10.540 rounded to $10.54 O.T. rate $10.54 × 1.5 = $15.81 Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow. The employees of Donnelly Music Company earn total wages of $4,690 during January. The total amount is taxable under FICA, FUTA, and SUTA. The state contribution rate for the company is 3.6%. The amount withheld for federal income taxes is $685.

Payment of monthly wages Wages             Payroll taxes

Explanation / Answer

Account Titles and explanation debit credit Wages expense 4690 FICA taxes payable- OASDI (4690*6.2%) 290.78 FICA taxes payable - HI (4690*1.45%) 68.01 Employee FIT 685 Cash 3646.21 Payroll taxes 499.49 FICA - OASDI 290.78 FICA - HI 68.01 FUTA (4690*0.6%) 28.14 SUTA (4690*2.4%) 112.56

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