In this last phase of your work on the Continuing Payroll Problem A, you will record the amounts withheld for group and health insurance and calculate the net pay for each employee. Refer to the partially completed payroll registers upon which you were working at the end of Chapter 5, and proceed as follows:
1. In the appropriate column of the payroll register, record the amount to be withheld for group life insurance. Each employee contributes 85¢ each week toward the cost of group insurance coverage, with the exception of Smith and Schork (Kipley Company), who are not yet eligible for coverage under the company plan.
2. Record the amount to be withheld for health insurance. Each employee contributes $1.65 each week toward the cost of health insurance.
3. Record the net pay for each employee. The net pay for each employee is obtained by subtracting the total amount of all deductions from the total earnings.
4. Each worker is to be paid by check. Assign check numbers commencing with No. 313.
5. Foot all money columns of the payroll register, and prove the accuracy of the column totals.
6. On a separate sheet of paper:
a. Prepare the journal entries as of January 12 to record the payroll and the payroll taxes for the week ending January 8. Credit Salaries Payable for the total net pay. Use the following tax rates and bases: employer’s FICA—OASDI, 6.2% on the first $127,200; employer’s FICA—HI, 1.45% on total earnings; FUTA, 0.6% on the first $7,000; and SUTA, 3.6785% on the first $9,750.
b. Prepare the journal entry to record the payment of the payroll on January 14 when the paychecks are distributed to all workers.
Your work on the Continuing Payroll Problem A is now completed, and you may be asked to submit your payroll register to your instructor. The experience you have gained in working on each of the succeeding phases of the Continuing Payroll Problem will aid you in undertaking the payroll work involved in Chapter 7. In the Comprehensive Payroll Project, you will be responsible for all aspects of payroll operations for a company for an entire calendar quarter.