Accounting for Payroll

Bags, Inc., a manufacturer of suitcases, has 10 employees; five are paid on a salary

basis, and five are hourly employees. The employees and their compensation are as

follows:

The salaried employees are covered by a comprehensive medical and dental plan. The

cost of the plan is $45 per employee and is deducted from each paycheck. The hourly

employees are covered only by a medical plan. The cost is calculated at 3.5% of gross

pay and is deducted from each check. The FICA rate is 7.65%, and FUTA is 6.2%, with the

maximum credit for state unemployment allowed. The state unemployment tax is 5.4%.

No employee has reached the FICA, FUTA, or SUTA salary limits. In addition, each of the

hourly employees, except Albert, belongs to the Suitcase Workers of America Union.

Union dues are $5.65 per paycheck and are deducted and paid on behalf of the hourly

employees. The income tax withholding rate is 28% for employees with annual incomes

above $29,500 and 15% for employees with annual incomes of $29,500 or less.

Hourly employees are paid weekly on Friday, January 6, 13, 20, and 27. Salaried

employees are paid twice a month, on January 13 and 27. Assume that payroll taxes

and all employee withholdings and deductions are paid on the 13th and the last day of

each month, for the current month.

Instructions: Make all entries related to Bags, Inc.'s, payroll for January 6, January 13,

As Follows:

Annual Salary

Ken Scott (president) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $91,500

Tatia Furgins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,000

Jennifer Poulns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,750

Robyn Meek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,800

Kyle Roberts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,900

Rate per Hour

Richard Dean (50 hours per week) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14.00

Denise Ray (40 hours per week) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.50

Dale Frank (40 hours per week) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.75

Bryan Leslie (30 hours per week) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.50

Albert Lamb (20 hours per week) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.65