Old Town Entertainment has two employees in Year 1. Clay earns $3,500 per month, and Philip, the manager, earns $10,400 per month. Neither is paid extra for working overtime. Assume the Social Security tax rate is 6 percent on the first $130,000 of earnings and the Medicare tax rate is 1.5 percent on all earnings. The federal income tax withholding is 16 percent of gross earnings for Clay and 21 percent for Philip. Both Clay and Philip have been employed all year. Required a. Calculate the net pay for both Clay and Philip for March. b. Calculate the net pay for both Clay and Philip for December. c. Is the net pay the same in March and December for both employees? d. What amounts will Old Town report on the Year 1 W-2s for each employee? Complete this question by entering your answers in the tabs below. Reg A and B Req C a. Clay a Philip b. Clay b. Philip Reg D Calculate the net pay for both Clay and Philip for March. Calculate the net pay for both Clay and Philip for December. (Do not round intermediate calculations and round your answers to 2 decimal places.) Net Pay Cexand ReqC >

Old Town Entertainment has two employees in Year 1. Clay earns $3,500 per month, and Philip, the manager, earns $10,400 per month. Neither is paid extra for working overtime. Assume the Social Security tax rate is 6 percent on the first $130,000 of earnings and the Medicare tax rate is 1.5 percent on all earnings. The federal income tax withholding is 16 percent of gross earnings for Clay and 21 percent for Philip. Both Clay and Philip have been employed all year. Required a. Calculate the net pay for both Clay and Philip for March. b. Calculate the net pay for both Clay and Philip for December. c. Is the net pay the same in March and December for both employees? d. What amounts will Old Town report on the Year 1 W-2s for each employee? Complete this question by entering your answers in the tabs below. Reg A and B Req C a. Clay a Philip b. Clay b. Philip Reg D Calculate the net pay for both Clay and Philip for March. Calculate the net pay for both Clay and Philip for December. (Do not round intermediate calculations and round your answers to 2 decimal places.) Net Pay Cexand ReqC >

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Lemur Corp. is going to pay three employees a year-end bonus. The amount of the year-end bonus and the amount of federal income tax withholding are as follows. Federal Gross Income Employee Filing Status Allowances Income Withholding Sarah Married 4 $10,000 $962 $8,000 $1,362 Single Kevin Single $7,000 $357 Lemur's payroll deductions include FICA Social Security at 6.2%, FICA Medicare at 1.45%, FUTA at 0.6%, SUTA at 5.4%, federal income tax as previously shown, state income tax at 5% of gross pay, and 401(k) employee contributions at 2% of gross pay Record the entry for the employee payroll on December 31. If required, round your answers to the nearest whole dollar. If an amount box does not require an entry, leave it blank. Dec. 31 Salaries Expense 25,000 ✓ Joe 1 ✓ FICA Social Security Tax Payable ✔ FICA Medicare Tax Payable Federal Income Tax Payable State Income Tax Payable 401(k) Retirement Plan Payable ✓ Salaries Payable V ✓ ✓ ✓ 2,681 ✓ 1,250 500 1,550 363
Sky Company employed Tom Mills in Year 1. Tom earned $5,700 per month and worked the entire year. Assume the Social Security tax rate is 6 percent for the first $110,000 of earnings, and the Medicare tax rate is 1.5 percent. Tom's federal income tax withholding amount is $950 per month. Use 5.4 percent for the state unemployment tax rate and 0.6 percent for the federal unemployment tax rate on the first $7,000 of earnings per employee. Required a. Answer the following questions. (1) What is Tom's net pay per month? (2) What amount does Tom pay monthly in FICA payroll taxes? (3) What is the total payroll tax expense for Sky Company for January Year 1? February Year 1? March Year 1? December Year 1? b. Assume that instead of $5,700 per month Tom earned $9,600 per month. Answer the following questions. (1) What is Tom's net pay per month? (2) What amount does Tom pay monthly in FICA payroll taxes? (3) What is the total payroll tax expense for Sky Company for January Year 1? February Year…
Adam Fleeman, a skilled carpenter, started a home improvement business with Tom Collins, a master plumber. Adam and Tom are concerned about the payroll taxes they will have to pay. Assume they form an S corporation, and each earns a salary of $85,000 from the corporation; in addition, they expect their share of business profits to be $60,000 each. How much combined Social Security tax and Medicare tax (Employee Rate=7.65%; Employer Rate=7.65%) will Adam and the corporation have to pay on his salary and profits?
Lemur Corp. is going to pay three employees a year-end bonus. The amount of the year-end bonus and the amount of federal income tax withholding are as follows. Employee Filing Status Allowances GrossIncome FederalIncomeWithholding Sarah Married 4 $11,000 $962 Joe Single 2 $8,000 $1,362 Kevin Single 1 $6,000 $357 Lemur’s payroll deductions include FICA Social Security at 6.2%, FICA Medicare at 1.45%, FUTA at 0.6%, SUTA at 5.4%, federal income tax as previously shown, state income tax at 5% of gross pay, and 401(k) employee contributions at 2% of gross pay. Record the entry for the employee payroll on December 31. If required, round your answers to the nearest whole dollar. If an amount box does not require an entry, leave it blank
Sienna Watson works for MRK all year and earns a monthly salary of $12,200. There is no overtime pay. Sienna's income tax withholding rate is 12% of gross pay. In addition to payroll taxes, Sienna elects to contribute 1% monthly to United Way for co-payment of the health insurance premium. As of September 30, Sienna had $122,000 of cumulative earnings. (Click the icon to view payroll tax rate information.) Read the requirements. Requirements Requirement 1. Compute Sienna's net pay for October. (Round all amounts to the nearest cent.) Gross pay Withholding deductions: Employee income tax $ 12,200.00 1. Compute Sienna's net pay for October 2. Journalize the accrual of salaries expense and the payment related to the employment of Sienna Watson Employee OASDI tax Employee Medicare tax Employee contribution to United Way Employee health insurance Total withholdings Net (take-home) pay $ 1,464.00 675.80 176.90 122.00 300.00 2,738.70 $ 9,461,30 Requirement 2. Journalize the accrual of…
Excelsior, Inc. has one employee who has worked January - October of the current year. The employee is married, paid weekly, and claims two allowances on her W-2. Her federal payroll tax withholding is $227. The company is in a state that has no state income taxes. The FICA Social Security tax rate is 6.2% on the first $118,500 of wages and the FICA Medicare tax rate is 1.45% on all wages. Excelsior, Inc.'s FUTA tax rate is 0.6% on the first $7,000 of wages and their SUTA tax rate is 2.3% on the first $8,000 of wages. The employee's earnings thus far are as follows: Gross pay Jan-Oct Gross pay for Nov. 15th $117,700 $1,580 Use the information above to calculate all of the taxes that should be withheld from the employees paycheck and her net pay for the November 15th pay period. Prepare the journal entry Excelsior, Inc. will record to accrue the November 15th wages for this employee. Round values to 2 decimal places if needed. Date 11/15 Description Debit Credit to accrue salaries and…
Hank earns $21.00 per hour with time-and-a-half for hours in excess of 40 per week. He worked 50 hours at his job during the first week of March, 2024. Hank pays income taxes at 15% and 7.65% for OASDI and Medicare. All of his income is taxable under FICA. Determine Hank's net pay for the week. (Do not round any intermediate calculations, and round your final answer to the nearest cent.) OA. $731.33. OB. $981.75 OC. $893.39 OD. $699.82 BIEN M
Elizabeth’s regular hourly wage rate is $22, and she receives an hourly rate of $33 for work in excess of 40 hours. During a January pay period, Elizabeth works 49 hours. Elizabeth’s federal income tax withholding is $97, and she has no voluntary deductions. Compute Elizabeth’s net pay for the pay period. Assume that the FICA tax rate is 7.65%.
Frank Claiborne (married; 5 federal withholding allowances) earned weekly gross pay of $2,040. For each period, he makes a 401(k) retirement plan contribution of 11.5% of gross pay. The city in which he works (he lives elsewhere) levies a tax of 1.4% of an employee's taxable pay (which is the same for federal and local income tax withholding) on residents, and 1.3% of an employee's taxable pay on nonresidents.Federal income tax withholding = $ State income tax withholding = $ Local income tax withholding = $
Shirley Riddle earns $2,338 biweekly. She is single and claims no withholding allowances. She saves 2% of her salary for retirement and pays $22.82 in nonexempt insurance premiums each pay period. The Social Security Tax is 6.2% from earnings to be taxed. The Medicare tax is 1.45% from all earnings. What are her net earnings for each pay period?
Vince Lupino works for Best Supplies Company, which pays its employees time and a half for all hours worked in excess of 40 hours per week. Lupino's rate of pay is $12.00 per hour paid weekly. Federal income tax withheld was $54.00. His wages are subject to Social Security tax withheld at the rate of 6.2% and Medicare tax at the rate of 1.45%. He worked 8 hours of overtime last week (week ended July 16). Required: 1. Compute the following: If required, round your answers to the nearest cent. a. Regular pay for the week $fill in the blank 2fb4580b7fd0f80_1 b. Overtime pay for the week $fill in the blank 2fb4580b7fd0f80_2 c. Total gross wages $fill in the blank 2fb4580b7fd0f80_3 d. Social Security withheld $fill in the blank 2fb4580b7fd0f80_4 e. Medicare tax withheld $fill in the blank 2fb4580b7fd0f80_5 f. Total withholding $fill in the blank 2fb4580b7fd0f80_6 g. Net pay $fill in the blank 2fb4580b7fd0f80_7 2. Journalize the payroll entry. When required,…
The two employees of Silver Company receive various fringe benefits. Silver Company provides vacation at the rate of $335 per day. Each employee earns one day of vacation per month worked. In addition, Silver Company pays a total amount of $690 per month in medical insurance premiums. Silver also contributes a total amount of $440 per month into an employee retirement plan. The federal unemployment tax rate is 6 percent, while the state tax rate is 4 percent. Unemployment taxes apply to the first $7,000 of earnings per employee. Assume a Social Security tax rate of 6 percent and a Medicare tax rate of 1.5 percent. Required a. Prepare the monthly journal entry for the accrued fringe benefits. b. Show the effect of the preceding transaction on a horizontal statements model. c. If the two employees each worked 250 days, what is Silver Company's total payroll cost (salary, payroll taxes, and fringe benefits) for the year? (Assume that each employee earns $335.00 per day.) Complete this…