Exercise 9-9A Calculating Payroll
Zolnick Enterprises has two hourly employees, Kelly and Jon. Both employees earn overtime at the rate of 1½ times the hourly rate for hours worked in excess of 40 per week. Assume the Social Security tax rate is 6 percent on the first $110,000 of wages, and the Medicare tax rate is 1.5 percent on all earnings. Federal income tax withheld for Kelly and Jon was $260 and $220, respectively, for the first week of January. The following information is for the first week in January, Year 1:
| Employee | Hours Worked | Wage Rate per Hour |
|---|---|---|
| Kelly | 54 | $32 |
| Jon | 44 | $26 |
Required
a. Calculate the gross pay for each employee for the week.
b. Calculate the net pay for each employee for the week.
c. Prepare the general journal entry to record payment of the wages.
Exercise 9-10A Calculating Payroll
Old Town Entertainment has two employees in Year 1. Clay earns $3,600 per month, and Philip, the manager, earns $10,800 per month. Neither is paid extra for working overtime. Assume the Social Security tax rate is 6 percent on the first $110,000 of earnings and the Medicare tax rate is 1.5 percent on all earnings. The federal income tax withholding is 15 percent of gross earnings for Clay and 20 percent for Philip. Both Clay and Philip have been employed all year.
Required
a. Calculate the net pay for both Clay and Philip for March.
b. Calculate the net pay for both Clay and Philip for December.
c. Is the net pay the same in March and December for both employees? Why or why not?
d. What amounts will Old Town report on the Year 1 W-2s for each employee?
Exercise 9-11A Calculating Employee and Employer Payroll Taxes
Sky Co. employed Tom Mills in Year 1. Tom earned $5,100 per month and worked the entire year. Assume the Social Security tax rate is 6 percent for the first $110,000 of earnings, and the Medicare tax rate is 1.5 percent. Tom’s federal income tax withholding amount is $900 per month. Use 5.4 percent for the state unemployment tax rate and 0.6 percent for the federal unemployment tax rate on the first $7,000 of earnings per employee.
Required
a. Answer the following questions:
(1) What is Tom’s net pay per month?
(2) What amount does Tom pay monthly in FICA payroll taxes?
(3) What is the total payroll tax expense for Sky Co. for January Year 1? February Year 1? March Year 1? December Year 1?
b. Assume that instead of $5,100 per month Tom earned $9,600 per month. Answer the questions in Requirement a.
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