This exercise continues the Lawlor Lawn Service, Inc., situation from Exercise 9-39 of Chapter 9. Refer to the Chapter 2 data for Exercise 2-61. Lawlor Lawn Service, Inc., is considering hiring its first “real” employee. The employee will earn $900 weekly and will have $81 in federal income tax and $33 for health insurance withheld, in addition to 7.65% FICA, each week. Assume the employee will pay no state or other taxes. The employer must pay 7.65% FICA tax, federal unemployment tax of 0.8% of the first $7,000 in pay, and state unemployment tax of 5.4% of the first $7,000 in pay.
Requirements
1. Calculate the amount of the employee’s weekly net pay.
2. Journalize the entries to accrue the weekly payroll on July 31, 2012, to record the employer’s payroll taxes associated with the payroll, and to pay the payroll on August 4, 2012.