Question

Lucy Rose works at College of Fort Worth and is paid $12 per hour for a 40-hour workweek and time-and-a-half for hours above 40.

Requirements

1. Compute Rose’s gross pay for working 60 hours during the first week of February.

2. Rose is single, and her income tax withholding is 15% of total pay. Rose’s only payroll deductions are payroll taxes. Compute Rose’s net (take-home) pay for the week. Assume Rose’s earnings to date are less than the OASDI limit.

3. Journalize the accrual of wages expense and the payment related to the employment of Lucy Rose.

Short answer

1. Gross pay = $720
2. Net pay = $612

3. Salaries and wages will be debited with $720.

Step-by-step solution

Gross pay

Rose’s gross pay for working 60 hours during the first week of

February;

$\begin{array}{c}\text{Gross\hspace{0.17em}Pay=\hspace{0.17em}Total\hspace{0.17em}working\hspace{0.17em}Hours×\hspace{0.17em}Rate\hspace{0.17em}per\hspace{0.17em}Hour}\\ \text{=\$60}\times \text{\$12}\\ \text{=\$720}\end{array}$

Income tax

$\begin{array}{c}\text{Withholding\hspace{0.17em}Amount=\hspace{0.17em}Total\hspace{0.17em}amount\hspace{0.17em}×\hspace{0.17em}}\frac{\text{15}}{\text{100}}\\ \text{=\$720×}\frac{\text{15}}{\text{100}}\\ \text{=\hspace{0.17em}\$108}\end{array}$

Rose’s net (take-home) pay for the week;

Journal Entries

Date	Particulars	Debit	Credit
1st week of Feb	Salaries and wages expense	$720
	Tax Payable		$108
	Cash		$612
	(To record salaries and wages expense and payroll withholdings.)