Example 4-6

Mandi Robinson, married with three allowances, earns a monthly salary of $2,400. She also receives a bonus on sales that exceed her quota for the year. For this year, her bonus amounts to $4,600. Robinson's employer pays her the regular monthly salary and the bonus together on her December paycheck. The withholding for the December pay is computed on the total amount of $7,000 ($2,400 + $4,600). After deducting the allowances, using the percentage Tax Table 4(b), the amount to withhold is $715.62 [$7,000 3($333.30 = $6,000.10 $2,254.00 = $3,746.10 15% = $561.92 + $153.70].

The names of the employees of Cox Security Systems and their regular salaries are shown in the following payroll register. Note that Hall and Short are paid monthly on the last payday, while all others are paid weekly.

In addition to the regular salaries, the company pays an annual bonus based on the amount of earnings for the year. For the current year, the bonus amounts to 8% of the annual salary paid to each employee. The bonus is to be paid along with the regular salaries on December 30, but the amount of the bonus and the amount of the regular salary will be shown separately on each employee's earnings statement. Assume that all employees received their regular salary during the entire year.

Prepare the payroll for the pay period ending December 30, showing the following for each employee:

Use the wage-bracket method to withhold federal income tax from the regular salaries.

Withhold a flat 25% on the annual bonus.

Total salaries and bonuses are subject to a 2% state income tax and a 1% city income tax.

Enter all amounts as positive numbers. Round your intermediate calculations and final answers to the nearest cent.

Click here to access the Wage-Bracket Method Tables.

For Period Ending December 30, 20--

Employee Name		No. of	Earnings			Deductions
	Marital	W/H		(a)	(b)	(c) FICA		(d)	(e)	(f)	(g)
	Status	Allowances	Regular	Supp'l.	Total	OASDI	HI	FIT	SIT	CIT	Net Pay
Hall, Michael	M	5	$5,000.00*	$	$	$	$	$	$	$	$
Short, Joy T.	M	2	2,750.00*
Abbott, Linda	S	1	520.00
Smith, Joseph	M	4	465.00
Tols, Sean M.	M	2	380.00
Gillespie, Michelle	S	1	350.00
Smart, Jennifer	M	2	575.00
White, Matthew J.	S	0	425.00
Totals			$	$	$	$	$	$	$	$	$

*Monthly

Compute the employer's FICA taxes for the pay period ending December 30.

OASDI Taxes		HI Taxes
OASDI taxable earnings	$	HI taxable earnings	$
OASDI taxes	$	HI taxes	$