Louis Welch is general manager of Moonwalk Salons. During 2024, Welch worked for the company all year at a $11,800 monthly salary. He also earned a year-end bonus equal to 10% of his annual salary. Welch's federal income tax withheld during 2024 was $1,180 per month, plus $4,531 on his bonus check. State income tax withheld came to $130 per month, plus $40 on the bonus. FICA tax was withheld on the annual earnings. Welch authorized the following payroll deductions: Charity Fund contribution of 4% of total earnings and life insurance of $40 per month. More Info For all payroll calculations, use the following tax rates and round amounts to the nearest cent: Employee: OASDI: 6.2% on first $132,900 earned; Medicare: 1.45% up to $200,000, 2.35% on earnings above $200,000. Employer: OASDI: 6.2% on first $132,900 earned; Medicare: 1.45%; FUTA: 0.6% on first $7,000 earned; SUTA: 5.4% on first $7,000 earned. Requirements 1. Compute Welch's gross pay, payroll deductions, and net pay for the full year 2024. Round all amounts to the nearest dollar. 2. Compute Moonwalk's total 2024 payroll tax expense for Welch. 3. Make the journal entry to record Moonwalk's expense for Welch'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 Moonwalk's payroll tax expense for Welch's total earnings. 5. Make the journal entry for the payment of the payroll withholdings and taxes.
Louis Welch is general manager of Moonwalk Salons. During 2024, Welch worked for the company all year at a $11,800 monthly salary. He also earned a year-end bonus equal to 10% of his annual salary. Welch's federal income tax withheld during 2024 was $1,180 per month, plus $4,531 on his bonus check. State income tax withheld came to $130 per month, plus $40 on the bonus. FICA tax was withheld on the annual earnings. Welch authorized the following payroll deductions: Charity Fund contribution of 4% of total earnings and life insurance of $40 per month. More Info For all payroll calculations, use the following tax rates and round amounts to the nearest cent: Employee: OASDI: 6.2% on first $132,900 earned; Medicare: 1.45% up to $200,000, 2.35% on earnings above $200,000. Employer: OASDI: 6.2% on first $132,900 earned; Medicare: 1.45%; FUTA: 0.6% on first $7,000 earned; SUTA: 5.4% on first $7,000 earned. Requirements 1. Compute Welch's gross pay, payroll deductions, and net pay for the full year 2024. Round all amounts to the nearest dollar. 2. Compute Moonwalk's total 2024 payroll tax expense for Welch. 3. Make the journal entry to record Moonwalk's expense for Welch'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 Moonwalk's payroll tax expense for Welch's total earnings. 5. Make the journal entry for the payment of the payroll withholdings and taxes.
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 10PA: Lemur Corp. is going to pay three employees a year-end bonus. The amount of the year-end bonus and...
Related questions
Question
Louis Welch
is general manager of
Moonwalk
Salons. During
2024,
Welch
worked for the company all year at a
$11,800
monthly salary. He also earned a year-end bonus equal to
10%
of his annual salary.
Welch's
federal income tax withheld during
2024
was
$1,180
per month, plus
$4,531
on his bonus check. State income tax withheld came to
$130
per month, plus
$40
on the bonus. FICA tax was withheld on the annual earnings.
Welch
authorized the following payroll deductions: Charity Fund contribution of
4%
of total earnings and life insurance of
$40
per month.
More Info
For all payroll calculations, use the following tax rates and round amounts to the nearest cent:
Employee:
|
OASDI:
6.2%
on first
$132,900
earned; Medicare:
1.45%
up to
$200,000,
2.35%
on earnings above
$200,000.
|
Employer:
|
OASDI:
6.2%
on first
$132,900
earned; Medicare:
1.45%;
FUTA:
0.6%
on first
$7,000
earned; SUTA:
5.4%
on first
$7,000
earned. |
Requirements
1.
|
Compute
Welch's
gross pay, payroll deductions, and net pay for the full year
2024.
Round all amounts to the nearest dollar. |
2.
|
Compute
Moonwalk's
total
2024
payroll tax expense for
Welch.
|
3.
|
Make the
Moonwalk's
expense for
Welch'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
Moonwalk's
payroll tax expense for
Welch's
total earnings. |
5.
|
Make the journal entry for the payment of the payroll withholdings and taxes.
|
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