8B-3

The following is a monthly payroll for the last three months of the year for Turner's Sporting Goods Shop, 2 Boat Road, Lynn, Massachusetts 01945. The shop is a sole proprietorship owned and operated by Bill Turner. The EIN for Turner's Sporting Goods Shop is 28-9311893.

The employees at Turners are paid once each month on the last day of the month. Amber Bixby is the only employee who has contributed the maximum into Social Security. None of the other employees will reach the Social Security wage base limit by the end of the year. Assume the rate for Social Security to be 6.2% with a wage base maximum of $117,000, and the rate of Medicare to be 1.45% on all earnings. Turner's is classified as a monthly depositor for Form 941 payroll tax deposit purposes.

Your tasks are to do the following:

1. Compute the December OASDI tax for Amber Bixby

2. Journalize the entries to record the employer's payroll tax expense for each period in the general journal. SUTA rate: 5.7%; FUTA rate: 0.6%.

3. Journalize the payment of each tax liability in the general journal.

4. Complete Form 941 for the fourth quarter of the current year.

October

Employee Monthly Earnings YTD Earnings OASDI Medicare Federal Income Tax

Amber Bixby $2,860 $117,000 $177.32 $41.47 $534.00

Ashley King $3,480 $39,350 $215.76 $50.46 $423.00

Gina Vale $3,760 $44,250 $233.12 $54.52 $533.00

$10,100 $200,600 $626.20 $146.45 $1,490.00

November

Employee Monthly Earnings YTD Earnings OASDI Medicare Federal Income Tax

Amber Bixby $2,860 $119,860 $0.00 $41.47 $601.00

Ashley King $3,880 $43,230 $240.56 $56.26 $465.00

Gina Vale $3,760 $48,010 $233.12 $54.52 $563.00

$10,500 $211,100 $473.68 $152.25 $1,629.00

December

Employee Monthly Earnings YTD Earnings OASDI Medicare Federal Income Tax

Amber Bixby $4,120 $123,980 $0.00 $59.74 $868.00

Ashley King $3,700 $46,930 $229.40 $53.65 $476.00

Gina Vale $4,380 $52,390 $271.56 $63.51 $702.00

$12,200.00 $223,300 $500.96 $176.90 $2,046.00