Exercise 9-9B Calculating payroll

Accounting for Current Liabilities and Payroll

Exercise 9-9B Calculating payroll

Wilkins Enterprises has two hourly employees: Marcia and Clark. 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 Marcia and Clark was $280 and $250, respectively. The following information is for the first week in January Year 1:

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 9-10B Calculating payroll

Easy Stop has two employees in Year 1. Catherine earns $4,500 per month and Jordan, the manager, earns $11,000 per month. Neither is paid extra if they work 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 Catherine and 20 percent for Jordan. Both Catherine and Jordan have been employed all year.

Required
a. Calculate the net pay for both Catherine and Jordan for March.
b. Calculate the net pay for both Catherine and Jordan for December.
c. Is the net pay the same in March and December for both employees? Why or why not?
d. What amounts will Easy Stop report on the Year 1 W-2s for each employee?