Sam Redd is paid $15 per hour for a 40-hour work week with time-and-a-half for o

Question

Sam Redd is paid $15 per hour for a 40-hour work week with time-and-a-half for overtime, which is not charged to specific jobs. For the week of March 4 -10, Tyler's labor time record was as follows: Mon Tues Wed Thur Fri Sat Total 8 5 610 10 2 41 Job B280 Machine maintenance Total 8 9810 10 3 48 Other Information: Sam's year-to-date wages as of March 3 were $7,500. He contributes $20 weekly for his health insurance premiums. Current tax rates in effect are: FIT withholding rate-10%; FICA-8% on the first $100,000 of wages; SUTA-4% on the first $8,000 of wages; and FUTA-1% on the first S8,000 of wages. (a) Calculate Sam's gross and net pay (b)Prepare the journal entries necessary to (1) (2) (3) Record Sam's payroll Pay Sam's payroll Distribute Sam's payroll to the appropriate accounts (c)Calculate the employer's payroll taxes and prepare the journal entry to record them employer's portion of payroll taxes

Explanation / Answer

(a) Gross Pay: 48 hours x $15.00/hr. $720.00 8 hours x $ 7.50/hr. (15.00/.5) 60 Total gross pay $780.00 Deductions: FIT Withholding $780 x 10% $78.00 FICA - Employee portion $780 x 8% 62.4 Health insurance premium 20 Total deductions $160.40 Net Pay $619.60 (b) Payroll 780      Employees’ Income Tax Payable 78      FICA Tax Payable 62.4      Health Insurance Premium Payable 20      Wages Payable 619.6 To record payroll Wages Payable 619.6      Cash 619.6 To record payment of payroll Work in Process (41 hrs. x $15) 615 Factory Overhead (7 hrs. x $15) + $60 (Overtime) 165      Payroll 780 To distribute payroll (c ) Year-to-date payroll, March 3 $7,500 Earnings March 4 - 10 780 Year-to-date payroll, March 10 $8,280 Subject to FUTA and SUTA 8,000 Not subject to FUTA and SUTA $280 Amount of earnings March 4 - 10 subject to unemployment taxes = $780 - 280 = $500 Employer’s payroll taxes: FICA   (per above) $62.40 SUTA ($500 x 4%) 20 FUTA ($500 x 1%) 5 Factory Overhead 87.4      FICA Tax Payable 62.4      State Unemployment Tax Payable 20      Federal Unemployment Tax Payable 5 To record employer’s payroll taxes

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