Assume that Diane DeCastro is a vice-president of Wells Fargo Bank's leasing operations in San Francisco. During 19X6 she worked for the company all year at a \(\$ 5,625\) monthly salary. She also earned a year-end bonus equal to 10 percent of salary.

DeCastro's federal income tax withheld during 19X6 was \(\$ 737\) per month. Also, there was a one-time federal withholding tax of \(\$ 1,007\) on her bonus check. State income tax withheld came to \(\$ 43\) per month, and there was a one-time state withholding tax of \(\$ 27\) on the bonus. The FICA tax withheld was 8.0 percent of the first \(\$ 60,000\) in annual earnings. DeCastro authorized the following payroll deductions: United Fund contribution of 1 percent of total earnings and life insurance of \(\$ 19\) per month.

Wells Fargo Bank incurred payroll tax expense on DeCastro for FICA tax of 8 percent of the first \(\$ 60,000\) in annual earnings. The bank also paid state unemployment tax of 5.4 percent and federal unemployment tax of 0.8 percent on the first \(\$ 7,000\) in annual earnings. In addition, the bank provides DeCastro with health insurance at a cost of \(\$ 35\) per month and pension benefits. During 19X6, Wells Fargo Bank paid \(\$ 7,178\) into DeCastro's pension program.

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1. Compute DeCastro's gross pay, payroll deductions, and net pay for the full year 19X6. Round all amounts to the nearest dollar.

2. Compute Wells Fargo Bank's total 19X6 payroll cost for DeCastro.

3. Prepare Wells Fargo Bank's summary general journal entries to record its expense for:

a. DeCastro's total earnings for the year, her payroll deductions, and her net pay. Debit Salary Expense and Executive Bonus Compensation as appropriate. Credit liability accounts for the payroll deductions and Cash for net pay.

b. Employer payroll taxes on DeCastro. Credit liability accounts.

c. Fringe benefit provided to DeCastro. Credit a liability account. Explanations are not required.

4. How will what you learned in this problem help you manage a business?