1. Compute Werner’s gross pay, payroll deductions, and net pay for the full year
ID: 2598857 • Letter: 1
Question
1. Compute Werner’s gross pay, payroll deductions, and net pay for the full year 2016. Round all amounts to the nearest dollar.
2. Compute Stoneybrook’s total 2016 payroll tax expense for Werner
3. Make the journal entry to record Stoneybrook’s expense for Werner’s total earnings for the year, his payroll deductions, and net pay. Debit Salaries Expense and Bonus Expense as appropriate. Credit liability accounts for the payroll deductions and Cash for net pay. An explanation is not required.
4. Make the journal entry to record the accrual of Stoneybrook’s payroll tax expense for Werner’s total earnings.
P11-26A Computing and journalizing payroll amounts
Lee Werner is general manager of Stoneybrook Salons. During 2016, Werner worked for the company all year at a $14,000 monthly salary. He also earned a year-end bonus equal to 15% of his annual salary.Werner’s federal income tax withheld during 2016 was $980 per month, plus $1,700 on his bonus check. State income tax withheld came to $60 per month, plus $40 on the bonus. FICA tax was withheld on the annual earnings. Werner authorized the following payroll deductions: Charity Fund contribution of 2% of total earnings and life insurance of $35 per month.Stoneybrook incurred payroll tax expense on Werner for FICA tax. The company also paid state unemployment tax and federal unemployment tax.
Requirements at the top
P11-26A Requirement 1 Lee Werner Payroll for the year ended December 31,2016 alculation Annual Gross Pay: Salary Bonus $ 14,000× 12 $168,000 × 15% $ 168,000 25,200 Total Gross Pay Deductions: Federal Income Tax(S980 x 12) + $1,700 State Income Tax FICA-OASDI FICA-Medicare Charity Fund Life Insurance (S60 x 12) + $40 6.2% first $117,000 1.45% × $193,200 2% $193,200 $35 × 12 Total Deductions Net Pay Requirement 2 Lee Werner for the year ended December 31, 2016 Employer Calculation Annual Total Gross Pay S 193,200 Employer Payroll Taxes: FICA-OASDI FICA -Medicare FUTA SUTA Total Employer Payroll TaxExplanation / Answer
1 Payroll for the year ended December 31,2016 Calculation Annual Gross pay: Salary 14000*12 168000 Bonus 168000*15% 25200 Total gross pay 193200 Deductions: Federal income tax (980*12)+1700 13460 State income tax (60*12)+40 760 FICA-OASDI 117000*6.2% 7254 FICA-Medicare 193200*1.45% 2801 Charity fund 193200*2% 3864 Life insurance 35*12 420 Total deductions 28559 Net pay 164641 2 Emplyer payroll tax expenses: Calculation Annual Total gross pay 193200 Employer payroll taxes FICA-OASDI 117000*6.2% 7254 FICA-Medicare 193200*1.45% 2801 FUTA 7000*0.6% 42 SUTA 7000*5.4% 378 10475 Total payroll expenses 203675 3 Date Accounts and explanation Debit Credit 2016 Dec 31. Salaries expense 168000 Bonus expense 25200 Employee federal income taxes payable 13460 Employee state income taxes payable 760 FICA-OASDI Taxes payable 7254 FICA-Medicare Taxes payable 2801 Charity fund payable 3864 Life insurance payable 420 Cash 164641 (Payment of paycheck due) 4 Date Accounts and explanation Debit Credit 2016 Dec 31. Payroll tax expense 10475 FICA-OASDI Taxes payable 7254 FICA-Medicare Taxes payable 2801 Federal Unemployment taxes payable 42 State Unemployment taxes payable 378 (Payroll taxes due)
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