Question

Paige Newton works for RWB all year and earns a monthly salary of $ 11,900. There is no overtime pay. Paige ​'s income tax withholding rate is 10 % of gross pay. In addition to payroll​ taxes, Paige elects to contribute 3% monthly to United Way. RWB also deducts $300 monthly for​ co-payment of the health insurance premium. As of September​ 30, Paige had $107,100 of cumulative earnings.

Required:
(a) Compute Paige's net pay for October.
(b) Journalize the accrual of salaries expense and the payment related to the employment of Paige Newton. Begin with the entry to accrue salaries expense and payroll withholdings for Paige Newton.
(c) Now record the entry to record the payment of wages to Paige.

Answer 1

Gross pay $11,900

Income tax withholding = $11,900 x 10% = ($1,190)

United Way contribution = $11,900 x 3% = ($357)

Health insurance = ($300)

Social Security withholdings = ($11,900 - $300) x 6.2% = ($719)

Social Security (employer) = $11,900 x 6.2% = $738

Medicare withholdings = ($11,900 - $300) x 1.45% = ($168)

Medicare (employer) = $11,900 x 1.45% = $173

A) Paige's net pay for October = $9,166

B) October 30, wages expense: Paige Newton

Dr Wages expense 11,900

Dr FICA taxes expense 911

Cr Wages payable 9,166

Cr Income tax withholding payable 1,190

Cr United Way contribution payable 357

Cr Health insurance payable 300

Cr Social Security withholdings (employee) payable 719

Cr Social Security payable = 738

Cr Medicare withholdings (employee) payable 168

Cr Medicare payable = 173

C) October 30, wages paid to Paige Newton:

Dr Wages payable 9,166

Cr Cash 9,166