Chapter 9.A, Problem 9BE

Calculating gross and net pay (Learning Objective 8) 10-15 min.

Ali Campbell works as a cook for Jenny’s diner. Her regular pay rate is $15 per hour, with time-and-a-half for hours in excess of 40 per week. Campbell’s payroll deductions include withheld income tax of 10% of total earnings, FICA tax, and a weekly deduction of $15 for a charitable contribution to United Way. Campbell’s employer is required to pay SUTA and FUTA tax. Use a 5.4% SUTA tax rate, and a .6% FUTA tax rate. The state unemployment wage base in the state where Campbell works is $36,000. Assume that Campbell has made $4,100 prior to this pay period.

Requirements

1. 1. Assuming Campbell worked 49 hours during the week, compute her gross pay and net pay for the week. Round amounts to the nearest cent.
2. 2. Make journal entries to record wages expense and payroll tax expense for the week. Explanations are not required. Round amounts to the nearest cent.