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Chapter 9: Q16E (page 433)

Question Lenny Florita, an unmarried employee, works 48 hours in the week ended January 12. His pay rate is $14
per hour, and his wages are subject to no deductions other than FICA Social Security, FICA Medicare, and
federal income taxes. He claims two withholding allowances.
Compute his regular pay, overtime pay (this company’s workers earn 150% of their regular rate for
hours in excess of 40 per week), and gross pay. Then compute his FICA tax deduction (6.2% for the Social
Security portion and 1.45% for the Medicare portion), income tax deduction (use the wage bracket withholding
table from Exhibit 9A.6), total deductions, and net pay. (Round tax amounts to the nearest cent.)

Short Answer

Expert verified

Answer

The net pay of the Lenny Florita is $596.31

Step by step solution

01

Definition of gross pay

The gross pay is the salary of the employee before any deductions.

02

Calculation of net pay and gross pay

	Hours	Hourly Rate
Regular Pay	40	$14	$560
Overtime Pay	8	$21	$168
Gross Pay	$728
FICA- Social Security			$45.13
FICA- Medicare			$10.56
Income Tax Deduction			$76
Total Deductions	$131.69
Net Pay	$596.31

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Most popular questions from this chapter

On January 15, the end of the first biweekly pay period of the year, North Company’s payroll register showed that its employees earned \(35,000 of sales salaries. Withholdings from the employees’ salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, \)6,500 of federal income taxes, \(772.50 of medical insurance deductions, and \)120 of union dues. No employee earned more than $7,000 in this first period. Prepare the journal entry to record North Company’s January

15 (employee) payroll expenses and liabilities. (Round amounts to cents.)

Question: Dusty Johnson is the accounting and finance manager for a manufacturer. At year-end, he must determine how to account for the company’s contingencies. His manager, Tom Pretti, objects to Johnson’s proposal to recognize an expense and a liability for warranty service on units of a new product introduced in the fourth quarter. Pretti comments, “There’s no way we can estimate this warranty cost. We don’t owe anyone anything until a product fails and it is returned. Let’s report an expense if and when we do any warranty work.”

Required

Prepare a one-page memorandum for Johnson to send to Pretti defending his proposal.

Sera Corporation has made and recorded its quarterly income tax payments. After a final review of taxes for the year, the company identifies an additional \(40,000 of income tax expense that should be recorded. A portion of this additional expense, \)6,000, is deferred for payment in future years. Record Sera’s yearend adjusting entry for income tax expense.

Keesha Co. borrows \(200,000 cash on November 1, 2017, by signing a 90-day, 9% note with a face value

of \)200,000.

1. On what date does this note mature?

2. How much interest expense results from this note in 2017? (Assume a 360-day year.)

3. How much interest expense results from this note in 2018? (Assume a 360-day year.)

4. Prepare journal entries to record (a) issuance of the note, (b) accrual of interest at the end of 2017, and

(c) payment of the note at maturity. (Assume no reversing entries are made.)

Question: Stark Company has five employees. Employees paid by the hour receive a \(10 per hour pay rate for the regular 40-hour workweek plus one and one-half times the hourly rate for each overtime hour beyond the 40 hours per week. Hourly employees are paid every two weeks, but salaried employees are paid monthly on the last biweekly payday of each month. FICA Social Security taxes are 6.2% of the first \)118,500 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. The company has a benefits plan that includes medical insurance, life insurance, and retirement funding for employees. Under this plan, employees must contribute 5% of their gross income as a payroll withholding, which the company matches with double the amount. Following is the partially completed payroll register for the biweekly period ending August 31, which is the last payday of August.

a. Complete this payroll register by filling in all cells for the pay period ended August 31. Hint: See Exhibit 9A.5 for guidance. (Round amounts to cents.)

b. Prepare the August 31 journal entry to record the accrued biweekly payroll and related liabilities for deductions.

c. Prepare the August 31 journal entry to record the employer’s cash payment of the net payroll of part b.

d. Prepare the August 31 journal entry to record the employer’s payroll taxes including the contribution to the benefits plan.

e. Prepare the August 31 journal entry to pay all liabilities (except for the net payroll in part c) for this biweekly period.

See all solutions

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