ACC 205 week 5 P10-18A Computing and journalizing payroll amounts [25–35 min]
ACC 205 week 5 P10-18A Louis Welch is general
manager of United Tanning Salons. During 2012, Welch worked for the company all
P10-18A Louis Welch is general manager of United Tanning
Salons. During 2012, Welch worked for the company all year at a $6,200 monthly
salary. He also earned a year-end bonus equal to 10% of his salary.
Welch's federal income tax withheld during 2012 was
$850 per month, plus $924 on his bonus check. State income tax withheld came to
$70 per month, plus $40 on the bonus. The FICA tax withheld was 7.65% of the
first $106,800 in annual earnings. Welch authorized the following payroll
deductions: Charity Fund contribution of 1% of total earnings and life
insurance of $5 per month.
United incurred payroll tax expense on Welch for FICA
tax of 7.65% of the first $106,800 in annual earnings. The company also paid
state unemployment tax of 5.4% and federal unemployment tax of 0.8% on the
first $7,000 in annual earnings. In addition, United provides Welch with health
insurance at a cost of $150 per month. During 2012, United paid $4,000 into
Welch's retirement plan.
Requirements
Compute Welch's gross pay, payroll deductions, and net
pay for the full year 2012.
Round all amounts to the nearest dollar.
2. Compute
United's total 2012 payroll expense for Welch.
3. Make the
journal entry to record United's expense for Welch's total earnings for the
year, his payroll deductions, and net pay. Debit Salary expense and Bonus
expense as appropriate. Credit liability accounts for the payroll deductions
and Cash for net pay. An explanation is not required.
P 10-18A
Req. 1
Employee
Louis Welch
For the Year
Ended December 31, 2010
|
Gross pay:
|
|
|
|
Salary
earnings ($6,200 × 12)
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$74,400
|
|
|
Bonus
($74,400 × .10)
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7,440
|
|
|
Total gross pay
|
|
$ 81,840
|
File name: ACC-205-week-5-P10-18A-Louis-Welch.doc File type: application/msword Price: $6
