Chapter 11, Problem E11.18E

To determine

Gross Pay and Net Pay: Gross pay refers to the amount which is earned by an employee including basic wages plus bonus earned by him. It is prior to all the deductions.

Gross Pay = Normal Wages + Bonus

Net Pay: It is the salary or the wages received by the employee after all the relevant deductions made by the employer.

Net Pay = Gross Pay – Income Tax Withheld – FICA taxes (OASDI and Medicare)–Charitable Contributions

Requirement 1

To determine:

Stanley’s gross pay and net pay for the week.

To determine

Requirement 2:

To prepare:

Journal Entry for Wages expense accrual.

To determine

Requirement 3:

To prepare:

Journal Entry to record Wages expense payment.