Assume that Marcy Jones is a marketing director in Metro Mobility's head office in Toronto. During 2012, she worked for the company all year at a $6,500 monthly salary. She also earned a year-end bonus equal to 20 percent of her salary.
Jones' monthly income tax withholding for 2012 was $1,762.28. Also, she paid a onetime withholding tax of $4,095.11 on her bonus cheque. She paid $307.31 per month toward the CPP until the maximum ($2,306.70) had been withheld. In addition, Jones' employer deducted $106.50 per month for EI until the maximum ($839.97) had been withheld. Jones authorized the following deductions: 1.5 percent per month of her monthly pay to Metro's charitable donation fund and $68 per month for life insurance.
Metro Mobility incurred CPP expense equal to the amount deducted from Jones' pay. EI cost the company 1.4 times the amount deducted from Jones' pay. In addition, the company provided Jones with the following fringe benefits: dental and drug insurance at a cost of $65 per month, and pension benefits to be paid to Jones upon retirement. The pension contribution is based on her income and was $5,350 in 2012.
Required
1. Compute Jones' gross pay, payroll deductions, and net pay for the full year 2012. Round all amounts to the nearest cent.
2. Compute Metro Mobility's total 2012 payroll cost for Jones.
3. Prepare Metro Mobility's summary general journal entries (explanations are not required) to record its expense for:
a. Jones' total earnings for the year, her payroll deductions, and her net pay. Debit Salary Expense and Executive Bonus Compensation as appropriate. Credit liability accounts for the payroll deductions and Cash for net pay.
b. Employer payroll expenses for Jones. Credit the appropriate liability accounts.
c. Fringe benefits provided to Jones. Credit Health Insurance Payable and Company Pension Payable.