2 3 4 5 6 7 8 9 10 11 12 Liam Wallace is general manager of Moonwalk Salons. During 2018, Wallace worked for the company all year at a $13,400 monthly salary. He also earned a year-end bonus equal to 5% of his annual salary. Wallace's federal income tax withheld during 2018 was $2,010 per month, plus $1,608 on his bonus check. State income tax withheld came to $110 per month, plus $80 on the bonus. FICA tax was withheld on the annual earnings. Wallace authorized the following payroll deductions: Charity Fund contribution of 2% of total earnings and life insurance of $15 per month. Moonwalk incurred payroll tax expense on Wallace for FICA tax. The company also paid state unemployment tax and federal unemployment tax. Requirements 1. Compute Wallace's gross pay, payroll deductions, and net pay for the full year 2018. Round all amounts to the nearest dollar. 160,800 8,040 168,840 25,728 1400 7,960.80 2,448.18 3,376.80 180 2. Compute Moonwalk's total 2018 payroll tax expense for Wallace. 41,094 13 14 15 16 3. Make the journal entry to record Moonwalk's expense for Wallace'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. 127,746 17 18 4. Make the journal entry to record the accrual of Moonwalk's payroll tax expense for Wallace's total earnings. 19 5. Make the journal entry for the payment of the payroll withholdings and taxes. 7,960.80 2,448.18 20 42 378 21 10,828.98 22 Ready Requirement 1: Sheet1 + Accessibility: Investigate + 100% 7:47 PM 2/23/2022 D 2 5 File Home Insert Page Layout Formulas Data Review View Help Comments Share Calibri 14 A A AutoSum Wrap Text Number Fill Paste BI U V v A Merge & Center $ % 900 00 Conditional Format as Cell Formatting Table Styles Insert Delete Format v Clear Filter Sort & Find & Select Analyze Data Undo Clipboard Font Alignment Number Styles Cells Editing Analysis E30 fx 168840 C D E F G H | J K L M N P Q 10,828.98 A 22 23 24 25 B Requirement 1: Liam Wallace Payroll for year ended December 31, 2020 26 27 Gross Pay: 28 Salary 29 Bonus 30 Total gross Pay 160,800 8,040 168,840 31 32 33 34 35 36 37 Deductions: Federal Income Tax State Income Tax Social Security (OASDI) Medicare Charity Fund 38 Life Insurance 39 Total Deductions 40 Net Pay 41 42 43 Ready Requirement 2: Sheet1 Accessibility: Investigate A 1. 100% 7:49 PM D 2/23/2022 13 Requirement 2: 14 15 Liam Wallace Employer Payroll Expense 16 47 Total Gross Pay 18 19 Employer Payroll Taxes: 50 Social Security 51 Medicare 52 FUTA (0.6% x $7,000) 53 54 55 eady Sheet1 SUTA (5.4% x $7,000) Total Employer Payroll Tax Total Payroll Expense (+ Accessibility: Investigate 7:56 PM 2/23/2022 160% 6 7 Requirement 3: 8 Post Account and Explanation Ref. Debit Credit 19 Date 0 1 Dec 31 Salaries and Wages Expense Bonus expense Social Security Tax Payable Medicare Tax Payable Fedral Income Tax Payable State Income Tax Payable Charitable Fund Payable Life Insurance Payable Cash 3 4 5 6 7 8 9 0 1 2. 3 Requirement 4: 4 To record Payroll Post 5 Date Account and Explanation Ref. Debit Credit 6 Dec 31 Payroll Tax Expense Social Security Tax Payable Medicare Tax Payable FUTA Tax Payable SUTA Tax Payable to record payroll tax expense 8 9 0 1 2. 3. 4. 5 Sheet1 (+ Ready Accessibility: Investigate Q 7:53 PM 2/23/2022 70% Requirement 5: Post Date Account and Explanation Ref. Debit Credit Dec 31 Federal Income Tax Payable State Income Tax Payable Social Security Tax Payable FUTA Tax Payable SUTA Tax Payable Medicare Tax Payable Charity Fund Payable Life Insurance Payable Cash to record payment of liabilities