Computing earnings, determining deductions and net amount due, preparing payroll register , journalizing payroll transactions.

Barbara Merino operates Merino Consulting Services. She has four empoyees and pays them on an hourly basis. During the week ended November 12, 2014, her employees worked the number

of hours shown below. Information about their hourly rates, maritial status, withholding allowances, and cumulative earnings for the year prior to the current pay period also appears below.

Employee

Hours worked

Regular Hourly Rate

Marital Status

Witholding Allowances

Cumulative Earnings

Kathryn Allen

43

$10.50

M

3

$26,465

Calvin Cooke

36

10.25

S

2

25.933

Maria Vasquez

45

29.75

M

4

75,268

Hollie Visage

41

32.75

S

2

82,858

Instructions:

1. Enter the basdic payroll information for each employee in a payroll register. Record the employee's name, number of withholding allowances, marital status, total hours, and overtime hours, and

regular hourly rate. Consider any hours worked beyond 40 in the week as overtime hours.

2. Compute the regular earnings, overtime premium and gross earnings for each employee. Enter the figures in teh payroll register.

3. Compute the amount of social security tax to be withheld from each employee's gross earnings. Assume a 6.2% social security rate on the first $106,800 earned by the employee during the year.

Enter the figures in the payroll register.

4. Compute the amount of Medicare tax to be withheld from each employee's gross earnings. Assume a 1.45% Medicare tax rate on all earning paid during the year. Enter the figures in the payroll

register.

5. Use the tax tables in Figure 10.2 on pages 309-310 to determine the federal income tax to be withheld. Federal income tax to be withheld from Vasquez's pay in $192 and from Visage's pay is $267.

Enter the figures in teh payroll register.

6. Compute the net amount due each employee and enter the figures in the payroll register.

7. Complete the payroll register. Allen and Cooke are office workers. Earning for Vasquez and Visage are charged to consulting wages.

8. Prepare a general journal entry to recored teh payroll for the week ended Novermber 12, 2013. Use the account titles given in this chapter. Use journal page 32.

9. Prepare the general journal entry to summarize payment of amounts due employees on Novermber 15, 2013.

Analyze:

What totall deductions were taken from emplyee paychecks for the pay period ended Noverber 12?