Lee Werner is general manager of Stoneybrook Salons. During 2016, Werner worked for the company all year at a $ 14,000 monthly salary. He also earned a year-end bonus equal to 15% of his annual salary.
Werners federal income tax withheld during 2016 was $980 per month, plus $1,700 on his bonus check. State income tax withheld came to $60 per month, plus $40 on the bonus. FICA tax was withheld on the annual earnings. Werner authorized the following payroll deductions: Charity Fund contribution of 2% of total earnings and life insurance of $35 per month.
Stoneybrook incurred payroll tax expense on Werner for FICA tax. The company also paid state unemployment tax and federal unemployment tax.
Requirements
1. Compute Werner’s gross pay, payroll deductions, and net pay for the full year 2016. Round all amounts to the nearest dollar.
2. Compute Stoneybrook’s total 2016 payroll tax expense for Werner.
3. Make the journal entry to record Stoneybrook’s expense for Werner’s total earnings for the year, his payroll deductions, and net pay. Debit Salaries Expense and Bonus Expense as appropriate. Credit liability accounts for the payroll deductions and Cash for net pay. An explanation is not required.
4. Make the journal entry to record the accrual of Stoneybrook’s payroll tax expense for Werner’s total earnings.