Barbara Merino operates Merino Consulting Services. She has four employees and pays them on an hourly basis. During the week ended November 12, 2016, her employees worked the number of hours shown below. Information about their hourly rates, marital status, withholding allowances, and cumulative earnings for the year prior to the current pay period also appears below.

INSTRUCTIONS

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

3. Compute the amount of social security tax to be withheld from each employee’s gross earnings. Assume a 6.2 percent social security rate on the first $113,700 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 percent 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 is $192 and from Visage’s pay is $267. Enter the figures in the 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. Earnings for Vasquez and Visage are charged to consulting wages.

8. Prepare a general journal entry to record the payroll for the week ended November 12, 2016. 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 November 15, 2016.

Analyze:

What total deductions were taken from employee paychecks for the pay period ended November 12?

Transcribed Image Text:

Regular Hourly Marital Withholding Cumulative Earnings $26,565 25,933 75,268 82,858 Hours Worked Employee Kathryn Allen Allowances Status Rate 43 S10.50 10.25 29.75 32.75 3 2 4 2 Calvin Cooke 36 Maria Vasquez 45 Hollie Visage 41