Answered: r and Payroll Journal Entry Mary Losch…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter8: Liabilities And Stockholders' Equity

Section: Chapter Questions

Problem 8.2.3MBA

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Payroll Register and Payroll Journal Entry

Mary Losch operates a travel agency called Mary’s Luxury Travel. She has five employees, all of whom are paid on a weekly basis. The travel agency uses a payroll register, individual employee earnings records, and a general journal.

Mary’s Luxury Travel uses a weekly federal income tax withholding table. Refer to Figure 8-4 in the text. The payroll data for each employee for the week ended March 22, 20—, are given. Employees are paid 1½ times the regular rate for working over 40 hours a week.

Name	No. of Allowances	Marital Status	Total Hours Worked Mar. 16–22	Rate	Total Earnings Jan. 1–Mar. 15
Bacon, Andrea	4	M	44	$14.00	$6,300.00
Cole, Andrew	1	S	40	15.00	6,150.00
Hicks, Melvin	3	M	44	13.50	5,805.00
Leung, Cara	1	S	36	14.00	5,600.00
Melling, Melissa	2	M	40	14.50	5,945.00

Social Security tax is withheld from the first $128,400 of earnings at the rate of 6.2%. Medicare tax is withheld at the rate of 1.45%, and city earnings tax at the rate of 1%, both applied to gross pay. Bacon and Leung have $15 withheld and Cole and Hicks have $10 withheld for health insurance. Bacon and Leung have $20 withheld to be invested in the travel agency’s credit union. Cole has $38.75 withheld and Hicks has $18.75 withheld under a savings bond purchase plan.

Mary’s Luxury Travel’s payroll is met by drawing checks on its regular bank account. The checks were issued in sequence, beginning with Check No. 423.

Required:

1. Prepare a payroll register for Mary’s Luxury Travel for the week ended March 22, 20--. (In the Taxable Earnings/Unemployment Compensation column, enter the same amounts as in the Social Security column.) Total the amount columns.

If required, round your answers to the nearest cent.

Payroll Register for Period Ended
March 22
20--
Taxable Earnings
Deductions
Federal Income
Social Security
Cumulative Total Unemploy. Comp.
Social Security
Medicare Tax
Health Insurance
Other
Net Pay
Таx
Тах
City Tax
Total
6,300 x
644
644 V
9 x
39
15 V Credit Union v
20
6,150 x
600
50 X
37 X
Bonds v
38.75 V
600
5,805 x
621 V
14 X
38 X
Bonds v
18.75 V
621
5,600 x
504 V
504 V
37 X
31 X
Credit Union v
20 v
5,945 x
580
580
19 X
35
X
29,800 x
2,949
2,949 V
129 X
18 X
97.5
2. Assuming that the wages for the week ended March 22 were paid on March 24, prepare the journal entry for the payment of the payroll.
Page: 1
DOC. POST.
NO. REF.
DATE
ACCOUNT TITLE
DEBIT
CREDIT
20--
1
Mar. 24
Wages and Salaries Expense v
2,949 V
1
Employee Federal Income Tax Payable v
129| х 2
2
Social Security Tax Payable v
182.82 X 3
3
Medicare Tax Payable v
42.74 X 4
4
City Tax Payable v
29.49 V 5
5
6
Health Insurance Premiums Payable v
50 V 6
Credit Union Payable v
40 V 7
7
U.S. Savings Bonds Payable v
57.50 V 8
8
Cash
v
2,417.45 X
9.
10
Payroll for week ended March 22
10
JO00000

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