Question

Brooke Hubert works for MRK all year and earns a monthly salary of $ 11 comma 900. There is no overtime pay. Brooke​'s income tax withholding rate is 10 % of gross pay. In addition to payroll​ taxes, Brooke elects to contribute 5 % monthly to United Way. MRK also deducts $ 125 monthly for​ co-payment of the health insurance premium. As of September​ 30, Brooke had $ 107 comma 100 of cumulative earnings. LOADING...​(Click the icon to view payroll tax rate​ information.) Requirements 1. Compute Brooke​'s net pay for October. 2. Journalize the accrual of salaries expense and the payments related to the employment of Brooke Hubert.

Answer 1

1. Compute Brooke​'s net pay for October

Brooke's gross monthly salary = $11,900

- federal income taxes withholdings = ($1,190)

- contribution to United Way = ($595)

- health insurance = ($125)

- social security = 6.2% x $11,900 = ($737.80)

- medicare = 1.45% x $11,900 = ($172.55)

net pay = $9,079.65

2. Journalize the accrual of salaries expense and the payments related to the employment of Brooke Hubert.

We must include here FUTA taxes paid by the employer. In this case, since we are not given the state unemployment (SUTA) tax rate, we can only calculate the federal unemployment tax 6% x $11,900 = $714. Both the employee and employer pays FICA taxes in an equal amount. The amount that is withheld from the employee's paycheck is identified as FICA tax withholding.

October 31, 202x

Dr Wages expense 11,900

Dr FICA taxes expense 910.35

Dr FUTA taxes expense 714

Cr Federal income tax withholding payable 1,190

Cr FICA tax (social security) withholding payable 737.80

Cr FICA tax (social security) payable 737.80

Cr FICA tax (medicare) withholding payable 172.55

Cr FICA tax (medicare) payable 172.55

Cr FUTA tax payable 714

Cr Health insurance payable 125

Cr United Way payable 595

Cr Wages payable 9,079.65