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Reference Figure 12.15 and use the following information to complete the requirements. A. Determine the federal income tax withholdings amount per monthly pay period for each employee. B. Record the employee payroll entry (all employees) for the month of January assuming FICA Social Security is 6.2%, FICA Medicare is 1.45%, and state income tax is equal to 3% of gross income. (Round to the nearest cent if necessary.)

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 12, Problem 12EB
Textbook Problem
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Reference Figure 12.15 and use the following information to complete the requirements.

Chapter 12, Problem 12EB, Reference Figure 12.15 and use the following information to complete the requirements. A. Determine

A. Determine the federal income tax withholdings amount per monthly pay period for each employee.

B. Record the employee payroll entry (all employees) for the month of January assuming FICA Social Security is 6.2%, FICA Medicare is 1.45%, and state income tax is equal to 3% of gross income. (Round to the nearest cent if necessary.)

To determine

(a)

Introduction:

Voluntary deductions refer to those deductions which are made only when employee designates deductions of such amounts. This includes health-care insurance, retirement contributions, pension funds, charitable contributions and such other benefits.

To compute:

The federal tax withholdings amount per month per period for each employee.

Explanation of Solution

Computation of federal tax withholdings:

Employee Monthly Gross Income ($) Withholding Allowance Amount of income tax ($)
Mr D 1,150 0 85
Mr M 1,270 2 27
Mr K 2,600 1 216
Total ($1,150+$1,270
To determine

(b)

Introduction:

Payroll is the payment made by company to its employees. It includes employee’s salaries and wages, and their deduction towards taxes, benefits, and employer contribution.

To journalize:

The transactions relating to the employee payroll.

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Chapter 12 Solutions

Principles of Accounting Volume 1
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