
Calculate the federal income tax to withhold from the wages or salaries of each employee using (a) percentage method (b) wage bracket method.

Explanation of Solution
Payroll Accounting: The process of payroll accounting includes the computation and payment of earnings of the employees and the payroll taxes to be paid to state and federal authorities as per applicable laws.
Calculate the federal income tax to withhold from the wages or salaries of each employee using (a) percentage method (b) wage bracket method.
Employee Name | Marital status | No. of withholding allowance | Gross wages or salary in $ | Amount to be Withheld in $ | |
Percentage Method | Wage bracket Method | ||||
Employee RS | S | 2 | 1,040 Weekly | (1) 100.02 | 101.00 |
Employee FX | S | 1 | 2,190 Weekly | (2) 379.61 | 379.61 |
Employee FH | M | 6 | 1,890 Biweekly | (3) 48.84 | 49.00 |
Employee CP | M | 4 | 2,315 Semi-monthly | (4) 121.21 | 121.00 |
Employee HR | M | 9 | 4,200 Monthly | (5) 12.48 | 14.00 |
(Table 1)
Note:
- When employees’ wages is higher than the last amount listed on the wage-bracket table, the percentage method must be used for the employee. For Employee FX the wages is higher than the amount provided in the wage-bracket table. As a result the amount to be withheld is computed using percentage method.
Working Note 1: Calculate the amount to be withheld for Employee RZ.
Particulars | Amount in $ | Amount in $ |
Gross wages | 1,040.00 | |
Less: Total Allowance for one withholding allowance | 159.60 | |
Excess wages | 880.40 | |
The tax from tax table: | ||
Excess wages | 880.40 | |
Less: Amount of excess over for excess wages | 815.00 | |
Total excess over amount | 65.40 | |
Multiply: Percentage of tax withheld for excess over | 22% | |
14.40 | ||
Add: Amount of income tax withheld for 22% | 85.62 | |
Federal Income Tax to be withheld | 100.02 |
(Table 2)
Working Note 2: Calculate the amount to be withheld for Employee FX.
Particulars | Amount in $ | Amount in $ |
Gross wages | 2,190.00 | |
Less: Total Allowance for one withholding allowance | 79.80 | |
Excess wages | 2,110.20 | |
The tax from tax table: | ||
Excess wages | 2,110.20 | |
Less: Amount of excess over for excess wages | 1,658.00 | |
Total excess over amount | 452.20 | |
Multiply: Percentage of tax withheld for excess over | 24% | |
108.53 | ||
Add: Amount of income tax withheld for 24% | 271.08 | |
Federal Income Tax to be withheld | 379.61 |
(Table 3)
Working Note 3: Calculate the amount to be withheld for Employee FH.
Particulars | Amount in $ | Amount in $ |
Gross wages | 1,890.00 | |
Less: Total Allowance for one withholding allowance | 957.60 | |
Excess wages | 932.40 | |
The tax from tax table: | ||
Excess wages | 932.40 | |
Less: Amount of excess over for excess wages | 444.00 | |
Total excess over amount | 488.40 | |
Multiply: Percentage of tax withheld for excess over | 10% | |
48.84 | ||
Add: Amount of income tax withheld for 10% | 0.00 | |
Federal Income Tax to be withheld | 48.84 |
(Table 4)
Working Note 4: Calculate the amount to be withheld for CP.
Particulars | Amount in $ | Amount in $ |
Gross wages | 2,315.00 | |
Less: Total Allowance for one withholding allowance | 691.60 | |
Excess wages | 1,623.40 | |
The tax from tax table: | ||
Excess wages | 1,623.40 | |
Less: Amount of excess over for excess wages | 1,275.00 | |
Total excess over amount | 348.40 | |
Multiply: Percentage of tax withheld for excess over | 12% | |
41.81 | ||
Add: Amount of income tax withheld for 12% | 79.40 | |
Federal Income Tax to be withheld | 121.21 |
(Table 5)
Working Note 5: Calculate the amount to be withheld for HR.
Particulars | Amount in $ | Amount in $ |
Gross wages | 4,200.00 | |
Less: Total Allowance for one withholding allowance | 3,112.20 | |
Excess wages | 1,087.80 | |
The tax from tax table: | ||
Excess wages | 1,087.80 | |
Less: Amount of excess over for excess wages | 963.00 | |
Total excess over amount | 124.80 | |
Multiply: Percentage of tax withheld for excess over | 10% | |
12.48 | ||
Add: Amount of income tax withheld for 10% | 00.00 | |
Federal Income Tax to be withheld | 12.48 |
(Table 6)
Want to see more full solutions like this?
Chapter 4 Solutions
Payroll Accounting
- The listing of all of the accounts available for use in a company's accounting system is known as the __________.arrow_forwardUnearned Revenues is what type of account? Asset Liability Stockholders' (Owner's) Equityarrow_forwardFind the person's adjusted gross income using the followining data Income from Jobs Interest Misc. Income Dividend Income Adjustments to Income Adjusted Gross Income $23 comma 250 $326 $2547 $62 $2049 $ enter your response herearrow_forward
- Please see an attachment for details general accounting questionarrow_forward7. Assets are usually reported on the balance sheet at which amount? Cost Current Market Value Expected Selling Pricearrow_forwardUnder the accrual basis of accounting, expenses are reported in the accounting period when which of the following occurs? Cash Is Paid An Expense Matches The Revenues Or Is Used Uparrow_forward
- I need answer financial accounting queenarrow_forwardWhat accounting principle requires using the same accounting methods and principles from one period to another?a) Materiality principleb) Consistency principlec) Matching principled) Revenue recognition principlearrow_forwardThe audited accounts of Lindsay Co. for year-end August 31, 2014 show a profit of $3,115,000 after charging the following: Depreciation 430,000 Rent 175,000Legal fees 1,350,000Audit fees 88,000 Donations 119,000Bad debts 242,000Foreign Travel 395,750Interest payments 62,375 Other Information: a. Legal fees are as follows: Expenses in respect of recovery of debts, $585,000 Expenses related to the increase private share capital, $765,000 b. Lindsay Co. donated $65,500 to UTECH University and $53,500 to HELP, a private charity registered under the Charities Act. c. Bad debts are as follows: • A loan of $76,130 to Derek Stan who failed to repayit. • $63,017, owed by Simplicity Ltd. which was declared bankrupt. • The balance is a percentage of receivables at year end which is deemed to be bad. d. Foreign travel expense included $268,210 for a vacation package for the marketing manager’s and his family plane tickets. The remaining…arrow_forward
- What does the accounting equation (Assets = Liabilities + Equity) represent?a) The relationship between revenues and expensesb) The relationship between assets and liabilitiesc) The relationship between debits and creditsd) The relationship between resources and claims to those resourcesarrow_forwardWhich financial statement shows the inflows and outflows of cash during a specific period?a) Balance sheetb) Income statementc) Cash flow statementd) Statement of changes in equityarrow_forwardChoose the right optionarrow_forward
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:CengagePrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
- Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,

