Assume Congress recently passed an Act raising all payroll taxes. The new rates are as follows:

Social Security: 7.1% of earnings up to a maximum of \($94,500\) in each calendar year

• Medicare: 2.05% of all earnings in a calendar year

• Federal Unemployment: 6.8% of the first \($10,000.00\) earned by each employee during a calendar year.

• Employers are permitted to deduct up to a maximum of 5.9% paid to state unemployment funds. The effective unemployment rates for the state ColdGuard operates in are 0.9% for federal unemployment and 5.9% for state unemployment.

Instructions:

1. Use the earnings data from Mastery Problem 3-6. Complete a new payroll register for the pay period ended March 14. Use the new tax rates passed by Congress. Medical and dental insurance remains the same for each employee.

2. Journalize the March 21 payroll payment on page 5 of a cash payments journal. The source document is Check No. 211.

3. Use a grid similar to the one in this chapter to calculate departmental payroll taxes.

4. Journalize the employer payroll taxes on page 7 of a general journal. Use March 21 of the current year as the date. The source document is Memorandum No. 33. 

Data from Problem 3-6

ColdGuard has two departments, Windows and Doors. It uses a biweekly payroll system of 26 pay periods per year. ColdGuard pays salesclerks and employees in the accounting department on an hourly basis, and they receive 1% times the regular hourly pay rate for all hours worked in excess of 40 hours in one week. The hours worked report shows the following information.

Department supervisors receive a biweekly salary and monthly commissions of 1% of net sales. Commissions for the previous month are paid in the first pay period of the next month.
ColdGuard’s partially completed payroll records for selected employees for the pay period ended March 14 and paid on March 21 of the current year are provided in the Working Papers.

Transcribed Image Text:

Name ID No. Bullock, Andrea E. 2 Demars, Scott R. 3 Kabic, Zora E. 1 Mondero, Teodora C. Purdy, Julie M. 5 Trang, Phuong M. 6 Reg-1 OT-1 Dept. Windows Doors Windows Doors 40 11 40 Windows 40 40 Hourly rates and salaries are as follows: Bullock, Andrea E. Demars, Scott R. Kabic, Zora E. Mondero, Teodora C. Purdy, Julie M. Trang, Phuong M. $600.00 Admin. $7.50 per hour $7.40 per hour $620.00 $6.60 per hour $6.50 per hour Reg-2 OT-2 12 13. 1.5 -40 40 40 40 21 24