PROBLEM 4 The following is the monthly payroll for the last 3 months of the year for Dell's Sporting Goods Shop, 2 Boat Road, Lynn, MA 01945. The shop is a sole propri- etorship owned and operated by Bill Dell. The EIN for Dell's Sporting Goods Shop is 28-9311893. The employees at Dell's are paid once each month on the last day of the month. Pete Clinton 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 $127,200 and the rate for Medicare to be 1.45% on all earnings. Dell'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 Pete Clinton. 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 cach tax liability in the general journal. 4. Complete Form 941 for the fourth quarter of the current year. OCTOBER FICA Employee Pete Clinton Susan Lincoln Samantha Sweet Monthly Earnings $ 2,780 3,600 3,780 $10,160 YTD Earnings $120,800 39,350 44,100 S204,250 OASDI $172.36 223.20 234,36 $629.92 Medicare Federal Income Tax $40.31 $530.00 52.20 424.00 54.81 531.00 $167.32 $1.485.00 NOVEMBER NOVEMBER Employee Pete Clinton Susan Lincoln Samantha Sweet Monthly Earnings $ 2,980 3,840 3,700 $10,520 YTD Earnings $123,780 43,190 47,800 5 214,770 FICA OASDI Medicare Federal Income Tax $184.76 $ 43.21 $ 596.00 238.08 5 5.68 463.00 229.40 53.65 564.00 5652.24 $152.54 $1,623.00 DECEMBER FICA Employee Pete Clinton Susan Lincoln Samantha Sweet Monthly Earnings $ 4,220 3,800 4,420 $12,440 YTD Earnings $128,000 46,990 52,220 $227,210 OASDI Medicare Federal Income Tax $212.04 % 61.19 $ 868.00 235.60 55.10 478.00 274.04 64.09 704.00 $721.68 $180.38 $2.050.00 PROBLEM 4 (Continued) 1. December OASDI tax for Pete Clinton: Taxable OASDI wages * FICA OASDI rate - OASDI tax _% 2. Journalize Entries for Payroll Tax Expense Oct. 31 Payroll Tax Expense Record employer's payroll tax Nov. 30 Payroll Tax Expense Record employer's payroll tax Dec. 31 Payroll Tax Expense 2. Journalize Entries for Payroll Tax Expense Oct. 31 Payroll Tax Expense Record employer's payroll tax Nov. 30 Payroll Tax Expense Record employer's payroll tax Dec. 31 Payroll Tax Expense Record employer's payroll tax cash Deposit Form 941 Taxes I . 31 FUTA Tax Payable (0.006 x $21,000) Cash Payment of federal unemployment taxes **NOTE: State unemployment taxes are paid quarterly, and would have been paid earlier in the year
