Business

 

The employees of Donnelly Music Company earn total wages of $4690 during January.  The total amount is taxable under FICA, FUTA and SUTA.  The state contribution rate for the company is 3.6%.  The amount withheld for federal income taxes is $685.  Journalize the payment of the monthly wages, and record the payroll taxes.

 

 

 

                                                                                                    DR             CR

 

6–4A.          Wages…………………………………………………………………..

 

FICA Taxes Payable—OASDI…………………………

 

FICA Taxes Payable—HI………………………………..

 

Employees FIT Payable…………………………………..

 

Cash……………………………………………………………….

 

 

 

Payroll Taxes………………………………………………………..

 

FICA Taxes Payable—OASDI…………………………

 

FICA Taxes Payable—HI………………………………..

 

FUTA Taxes Payable………………………………………

 

SUTA Taxes Payable………………………………………

 

 

 

Vulcra Inc. has semi monthly payroll of $67,000 on September 12.  The total payroll is taxable under FICA Taxes – HI; $63,850 is taxable under FICA.  Taxes – OASDI and $10,300 is taxable under FUTA and SUTA.  The state contributions rate for the company is 4.1%.  The amount withheld for federal income taxes is $9,911.  The amount withheld for state income taxes is $1,410.

 

 

 

  1.  Journalize the payment of the wages and record the payroll taxes on September 12.

    DR             CR

 

 

 

6–5A.  (a)   Wages…………………………………………………………………..

 

FICA Taxes Payable—OASDI…………………………

 

FICA Taxes Payable—HI………………………………..

 

Employees FIT Payable…………………………………..

 

Employees SIT Payable………………………………….

 

Cash……………………………………………………………….

 

 

 

Payroll Taxes………………………………………………………..

 

FICA Taxes Payable—OASDI…………………………

 

FICA Taxes Payable—HI………………………………..

 

FUTA Taxes Payable………………………………………

 

SUTA Taxes Payable………………………………………

 

 

 

b.  Assume that the employees of Vulcra, Inc. must also pay state contributions (disability insurance) of 1% on the taxable payroll of $62,100 and that the employees’ contribution are to be deducted by the employer.  Journalize the September 12 payment of wages, assuming that the state contributions of the employees are kept in a separate account.

 

 

 

             (b)   Wages…………………………………………………………………..

 

FICA Taxes Payable—OASDI…………………………

 

FICA Taxes Payable—HI………………………………..

 

Employees Disability Contributions Payable….

 

Employees FIT Payable…………………………………..

 

Employees SIT Payable………………………………….

 

Cash……………………………………………………………….

 

Kip Bowman is owner and sole employee of KB Corporation.  He pays himself a salary of $1,500 each week.

 

 

 

Additional tax information includes:

 

FICA tax – OASDI……………………………….. .6.2% on first$113,700

 

Fica Tax – HI    ……………………………………………….. 1.45% total pay

 

Federal income tax…………………………………………….. $232 per pay

 

State income tax …. 22% of the federal income tax withholding

 

Federal unemployment tax ……………………… .6%  on first $7,000

 

State unemployment tax ………………………  .05% on first $14,000

 

 

 

Additional payroll deductions include:

 

401(k) plan       ……………………………………………………… 3% per pay

 

Child support garnishment ……………………………….. $100 per pay

 

Health insurance premium …………………………………. $93 per pay

 

 

 

Record the payroll entry and payroll tax entry for the pay of the week ended June 6 (his year to date pay is $31,500).

 

                                                                                                  DR                 CR

 

6–7A.          Wages…………………………………………………………………

 

FICA Taxes Payable—OASDI………………………….

 

FICA Taxes Payable—HI…………………………………

 

Employees FIT Payable…………………………………..

 

Employees SIT Payable…………………………………..

 

Retirement Plan Contributions Payable……………..

 

Garnishment Payable………………………………………

 

Health Insurance Premiums Payable…………………

 

Cash………………………………………………………………

 

 

 

Payroll Taxes……………………………………………………….

 

FICA Taxes Payable—OASDI………………………….

 

FICA Taxes Payable—HI…………………………………

 

 

 

The following information pertains to the payroll of Texwera Tile Company on June 6:

 

 

 

  1. The total wages earned by employees are $17,210
  2. The state unemployment insurance contribution rate is 3.5%
  3. The entire amount of wages is taxable under FICA FUTA AND SUTA.
  4. The amount withheld from the employees’ wages for federal income taxes is $1890 for state income taxes, $369.40; and for group insurance $193.

     

    Journalize the payment of wages and record the payroll taxes June 6th.

 

                                                                                                 DR                 CR

 

6–9A.          Wages…………………………………………………………………

 

FICA Taxes Payable—OASDI………………………….

 

FICA Taxes Payable—HI…………………………………

 

Employees FIT Payable…………………………………..

 

Employees SIT Payable…………………………………..

 

Group Insurance Premiums Collected……………….

 

Cash………………………………………………………………

 

 

 

Payroll Taxes……………………………………………………….

 

FICA Taxes Payable—OASDI………………………….

 

FICA Taxes Payable—HI…………………………………

 

FUTA Taxes Payable………………………………………

 

SUTA Taxes Payable………………………………………

 

 

 

On December 31, 20–, Karmansky Company needed to record its accrued wages for year-end.  If December 31 is a Tuesday then Karmansky Company must account for  two days of wages.  The company operate on a five day work week, the prior week’s gross pay (December 26th payday) was $32,650 and the net pay was $21,330..  Journalize the adjusting  entry to be made on December 31 for the accrued wages.

 

 

 

DR             CR

 

6–11A.      Wages…………………………………………………………………

 

Wages Payable……………………………………………….

 

 

 

 

 

In Oregon employers who are covered by the state workers’ compensation law withhold employee contributions from the wages of covered employees at the rate of 3.3 cents for each hour or part of an hour that the worker is employed.  Every covered employer is also assessed 3.3 cents per hour for each worker employer for each hour or part of an hour.  The employer employee contributions for worjkers’ compensation are collected monthly, quarterly, or annually by the employer’s insurance carrier, according to a schedule agreed upon by the employer and the carrier.  The insurance carrier remits the contributions to the state’s Workers’ Compensation Department.

 

 

 

Certez Company a covered employer in Oregon, turns over the employer employee workers’ compensation contributions to its insurance carrier by the 15th of each month for the preceding month.  During the month of July, the number of full-time emplyee hours worked by the company’s employees was 8270; the number of part-time employee hours was 1950.

 

 

 

  1. The amount the companby should have withheld from its full and part time employees during the month of July for workers’ compensation isnurance is $ ____.

     

    6–13A.  (a)Full-time employee-hours…………………………………………………………

    Part-time employee-hours………………………………………………………..

    Total…………………………………………………………………………………

    Contribution rate……………………………………………………………………..         ×   0.033

    July withholding………………………………………………………………………

 

 

 

The title you would give to the general ledger liability account to which the amount withheld from the employees’ earnings would be credited is:   ______________.

 

 

 

(b)Workers Compensation Contributions Collected, Workers Compensation Payments Withheld, or Workers Compensation Contributions Payable*

 

 

 

Journalize the entry on July 31 to record the employer’s liability for workers’ compensation insurance for the month.

 

 

 

(c)Workers Compensation Insurance Expense…………….

 

Workers Compensation Contributions

 

Payable………………………………………………………….

 

 

 

Full-time employee-hours………………………………………

 

Part-time employee-hours……………………………………..

 

Total………………………………………………………………

 

Contribution rate…………………………………………………..         ×  0.033

 

Employer’s liability for July…………………………………….

 

 

 

 

 

 

 

Journalize the entry on August 15 to record payment to the insurance carrier of the amount withheld from the employees’ earnings for workers; compensation insurance and the amount of the employer’s liability.

 

 

 

(d)*Workers Compensation Contributions Collected……..

 

Workers Compensation Contributions Payable……….

 

Cash…………………………………………………………….

 

 

 

During 2014 Jeff Smallwood worked for two different employers.  Until May, he worked for Rowland Construction Co. In Ames Iowa, and earned $22,000.  The state unemployment rate for Rowland is 4.6%.  He then changed jobs and worked for Ford Improvement Co. In Topeka Kansas, and earned $29,500 for the rest of the year.  The state unemployment rate for Ford is 5.1%.  Determine the unemployment taxes (FUTA and SUTA) that would be paid by:

Rowland

5–8A.  (a)       FUTA tax…………………………………………………… $X,XXX × X.XXX    =   $XX.XX

SUTA tax………………………………………………… $XX,XXX × X.XXX    =   X,XXX.XX

Ford Improvement                                                                                           Total    = $X,XXX.XX

 

(b)       FUTA tax…………………………………………………… $X,XXX × X.XXX    =   $XX.XX

SUTA tax…………………………………………………… $X,XXX × X.XXX    =   XXX.XX

Total    =$XXX.XX

Peroni Co. paid wages of $170,900 this year.  Of this amount, $114,000 was taxable for net FUTA and SUTA purposes.  The state’s contribution tax rate is 3.1% for Peroni Co.  Due to cash flow problems, the company did not make any SUTA payments until after the Form 940 filing date.  Compute

 

5–10A.  (a)       $114,000 × 0.031 × 90%………………………………………………….          $X,XXX.XX

$114,000 × 0.023 (additional credit to 5.4%)……………………             X,XXX.XX

Total FUTA tax credit……………………………………………………….          $X,XXX.XX

 

(b)       $114,000 × 0.060…………………………………………………………….            $X,XXX.XX

Less: Credit against tax [see (a) above]…………………………..            (X,XXX.XX)

Net FUTA tax…………………………………………………………………..            $X,XXX.XX

 

(c)        Net FUTA tax…………………………………………………………………..          $X,XXX.XX

FUTA tax without penalty: $114,000 × 0.006…………………..                XXX.XX

Penalty……………………………………………………………………………             $XXX.XX


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