A weekly payroll summary made from labor time records shows the following data for TMC Company: Employee Classification Marital Status Hourly Rate Regular Hours Overtime Hours C. Collier Direct Married $15 40 2 S. Brown Direct Single $13 40 6 E. Anglin Direct Single $15 40 R. Kues Indirect Married $12 40 3 A. Studer Indirect Married $16 38 Other information:

Question

a. Overtime is payable at one-and-a-half times the regular rate of pay for an employee and is distributed to all jobs worked on during the period.
b. Income taxes withheld (FIT) are $50 for employees with $610 or more of gross income in the period and $40 for those who earn less.
c. Each married employee contributes $60 for health insurance; single employees contribute $30.
d. FICA taxes are 8% on the first $100,00 . of gross pay; FUTA and SUTA are 1% and 4%, respectively, on the first $8,00 . of gross pay. Since this is January, none of the employees have reached the limitations.

Required:
1 . Determine the net pay of each employee.
2 . Prepare the journal entries for the following:
a. Recording the payroll.
b. Paying the payroll.
c. Distributing the payroll.

Answer 1

1.
Regular
Earnings Overtime
Earnings Gross
Earnings FIT
W/H FICA
W/H Health
Insurance Net
Pay
C. Collier 630.00 15.00 645.00 50.00 51.60 60.00 483.40
S. Brown 598.00 39.00 637.00 50.00 50.96 30.00 506.04
E. Anglin 600.00 . 600.00 40.00 48.00 30.00 482.00
R. Kues 516.00 18.00 534.00 40.00 42.72 60.00 391.28
A. Studer 608.00 . 608.00 . 40.00 . 48.64 60.00 . 459.36
2,952.00 72.00 3,024.00 220.00 241.92 240.00 2,322.08

2.
Payroll 3,024.00 .
FICA Taxes Payable 241.92
Employee Income Taxes Withheld 220.00
Health Insurance Payable 240.00
Wages Payable 2,322.08

Wages Payable 2,322.08
Cash 2,322.08

Work In Process (630 + 598 + 600) 1,828.00 .
Factory Overhead (516 + 608 + 72) 1,196.00 .
Payroll 3,024.00