Chapter 3, Problem 17PA

1.

To determine

Calculate the regular earnings for the weekly payroll ended December 13, 2019.

Explanation of Solution

Calculate the regular earnings for the weekly payroll ended December 13, 2019.

Step 1: Calculate the annual salary of Employee LR, Employee RB and Employee GL.

Employee	Monthly salary (A)	Annual salary (A×12months)
Employee LR	$6,240 per month	$74,880.00
Employee RB	$4,680 per month	$56,160.00
Employee GL	$4,900 per month	$58,800.00

Table (1)

Step 2: Calculate the regular earnings of each employees.

Employee	Annual salary (A)	Regular Weekly earnings $\left(\frac{\text{A}}{\text{12}}\right)$
Employee MA	$97,240	$1,870.00
Employee BC	$91,000	$1,750.00
Employee LR	$74,880	$1,440.00
Employee RB	$56,160	$1,080.00
Employee GL	$58,800	$1,130.77
Total	$378,080	$7,270.77

Table (2)

Thus, the total regular earnings for the weekly payroll ended December 13, 2019 is $7,270.77

2.

To determine

Calculate the overtime earnings if any applicable to any employee.

Explanation of Solution

Calculate the overtime earnings for Employee GL.

Employee	Weekly earnings (A)	Regular hourly rate (B)$\left(\frac{\text{A}}{40\text{Hours}}\right)$	Overtime hourly rate (C) $\left(\text{B}\times \text{1}\text{.5}\right)$	Overtime earnings (D) $\left(\text{C}\times \text{8Hours}\right)$
Employee GL	$1,130.77	$28.27	$42.40	$339.23

Table (3)

Thus, the overtime earnings for Employee GL is $339.23.

3.

To determine

Calculate the total regular, overtime earnings and bonus.

Explanation of Solution

Calculate the total regular, overtime earnings and bonus.

Employee	Regular Weekly earnings	Overtime earnings	Annual bonus	Total earnings
Employee MA	$1,870.00	$0.00	$40,000	$41,870.00
Employee BC	$1,750.00	$0.00	$25,000	$26,750.00
Employee LR	$1,440.00	$0.00	$20,000	$21,440.00
Employee RB	$1,080.00	$0.00	$15,000	$16,080.00
Employee GL	$1,130.77	$339.23	$8,000	$9,470.00
Total	$7,270.77	$339.23	$108,000	$115,610.00

Table (4)

Calculation for total regular, overtime earnings and bonus is as follows.

Table (5)

4 and 5.

To determine

Calculate the FICA taxable wages for this period and FICA taxes to be withheld for this period.

Explanation of Solution

Calculate the FICA taxable wages for this period and FICA taxes to be withheld for this period.

Cumulative earnings as of Last Pay Period	FICA Taxable Wages This Pay Period		FICA Taxes to be Withheld		Employees
	OASDI (A)	HI (B)	OASDI	HI
$91,630	$36,770.00	$41,870	$2,279.74	$607.12	Employee MA
$85,750	$26,750.00	$26,750	$1,658.50	$387.88	Employee BC
$70,560	$21,440.00	$21,440	$1,329.28	$310.88	Employee LR
$52,920	$16,080.00	$16,080	$996.96	$233.16	Employee RB
$34,890	$9,470.00	$9,470	$587.14	$137.32	Employee GL
	$110,510.00	$115,610.00	$6,851.62	$1,676.35	Totals

Table (6)

Note: Employee MA’s earnings is exceeding the taxable wage limit of $128,400. Thus, the $5,100$\left[\left(\$91,630+\$41,870\right)-\$128,400\right]$ would be deducted from the annual salary for OASDI taxable earnings. Thus, the total OASDI taxable earnings would be $36,770$\left(\$41,870-\$5,100\right)$.

Step 3: Calculate the employer’s portion of the FICA taxes for the week ended.

Calculate the OASDI taxes.

$\begin{array}{c}\text{Employer's portion of OASDI taxes}=\left(\text{Total OASDI earnings}\times \text{Tax rate}\right)\\ =\left(\$110,510\times \frac{6.20}{100}\right)\\ =\$6,851.62\end{array}$

Calculate the HI taxes.

$\begin{array}{c}\text{Employer's portion of HI taxes}=\left(\text{Total HI earnings}\times \text{Tax rate}\right)\\ =\left(\$115,610\times \frac{1.45}{100}\right)\\ =\$1,676.35\end{array}$

Calculate the total FICA taxes.

$\begin{array}{c}\text{Employer's portion of FICA taxes}=\left(\text{Total OASDI taxes}\times \text{Total HI taxes}\right)\\ =\left(\$6,851.62+\$1,676.35\right)\\ =\$8,527.97\end{array}$