Karen Jolly operates a bakery called Karen’s Cupcakes. She has five employees, all of whom are paid on a weekly basis. Karen’s Cupcakes uses a payroll register, individual employee earnings records, and a general journal. Karen’s Cupcakes uses a weekly federal income tax withholding table like the one in Figure 8-4 in the text. The payroll data for each employee for the week ended February 15, 20--, are given below. Employees are paid 1½ times the regular rate for working over 40 hours a week. No. of Marital Total Hours Total Earnings Name Allowances Status Worked Feb. 9–15 Rate Jan. 1–Feb. 8 Barone, William 1 S 40 $14.00 $3,360.00 Hastings, Gene 4 M 45 15.00 3,870.00 Nitobe, Isako 3 M 46 12.00 3,168.00 Smith, Judy 2 M 42 13.00 3,276.00 Tarshis, Dolores 1 S 39 14.50 3,480.00 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. Hastings and Smith have $35 withheld and Nitobe and Tarshis have $15 withheld for health insurance. Nitobe and Tarshis have $25 withheld to be invested in the bakers’ credit union. Hastings has $18.75 withheld and Smith has $43.75 withheld under a savings bond purchase plan. Karen’s Cupcakes’ payroll is met by drawing checks on its regular bank account. The checks were issued in sequence, beginning with No. 365.

PAYROLL ACCT.,2019 ED.(LL)-TEXT

19th Edition

ISBN:9781337619783

Author:BIEG

Publisher:BIEG

Chapter4: Income Tax Withholding

Section: Chapter Questions

Problem 5PB

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Karen Jolly operates a bakery called Karen’s Cupcakes. She has five employees, all of whom are paid on a weekly basis. Karen’s Cupcakes uses a payroll register, individual employee earnings records, and a general journal.

Karen’s Cupcakes uses a weekly federal income tax withholding table like the one in Figure 8-4 in the text. The payroll data for each employee for the week ended February 15, 20--, are given below. Employees are paid 1½ times the regular rate for working over 40 hours a week.

	No. of	Marital	Total Hours		Total Earnings
Name	Allowances	Status	Worked Feb. 9–15	Rate	Jan. 1–Feb. 8
Barone, William	1	S	40	$14.00	$3,360.00
Hastings, Gene	4	M	45	15.00	3,870.00
Nitobe, Isako	3	M	46	12.00	3,168.00
Smith, Judy	2	M	42	13.00	3,276.00
Tarshis, Dolores	1	S	39	14.50	3,480.00

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. Hastings and Smith have $35 withheld and Nitobe and Tarshis have $15 withheld for health insurance. Nitobe and Tarshis have $25 withheld to be invested in the bakers’ credit union. Hastings has $18.75 withheld and Smith has $43.75 withheld under a savings bond purchase plan.

Karen’s Cupcakes’ payroll is met by drawing checks on its regular bank account. The checks were issued in sequence, beginning with No. 365.

Required:

1.	Prepare a payroll register for Karen’s Cupcakes for the week ended February 15, 20--. (In the Taxable Earnings/Unemployment Compensation column, enter the same amounts as in the Social Security column.) Total the amount columns and verify the totals.
2.	Assuming that the wages for the week ended February 15 were paid on February 17, prepare the journal entry for the payment of this payroll.

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