All employees are paid $10.00 per hour, except Peavy, who receives $20 per hour. All overtime premium pay, except Peavys, is chargeable to the job, and all employees, including Peavy, receive time-and-a-half for overtime hours.
1. Calculate the total payroll and total net earnings for the week. Assume that an 18% deduction for federal income tax is required in addition to FICA deductions. Assume that none of the employees has achieved the maximums for FICA and unemployment taxes. Hours not worked on vans are idle time and are not charged to the job.
2. Prepare the journal entries to record and pay the payroll.
3. Prepare the journal entry to distribute the payroll to the appropriate accounts.
4. Determine the dollar amount of labor that is chargeable to each van, assuming that the overtime costs are proportionate to the regular hours used on the vans. (First compute an average labor rate for each worker, including overtime premium, and then use that rate to charge all workers, hours tovans.)