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Below is a payroll sheet for Swifty Import Company for the month of September 2017. The company is allowed a 1% unemployment compensation rate by the state; the federal unemployment tax rate is 0.8% and the maximum for both is $7,000. Assume a 10% federal income tax rate for all employees and a 7.65% FICA tax on employee and employer on a maximum of $118,500. In addition, 1.45% is charged both employer and employee for an employee’s wages in excess of $118,500 per employee.
Complete the payroll sheet. (Round answers to 2 decimal places, e.g. 15.26.) Unemployment Tax September Income Tax Withholding Earnings Name Earnings FICA State Federal to Aug. 31 $6,900 6,800 7,500 12,200 106,300 111,100 $900 800 1,100 2,000 13,100 16,900 B. D. Williams 90 0.8 D. Raye 1.6 80 110 200 1310 2 K. Baker 0 0 F. Lopez 0 0 A. Daniels 0 0 B. Kingston 1690 0 0 Total
Expert Answer
The following is the payroll sheet.
| Name | Earnings to Aug 31 | September earnings | Income tax withholidings | FICA | State | Federal | Notes |
| B. D.Williams | $6,900 | $900 | $90 | 68.85 | $1 | $0.80 | |
| D. Raye | 6,800 | 800 | 80 | 61.20 | 2.00 | 1.60 | |
| K.Baker | 7,500 | 1,100 | 110 | 84.15 | 0 | 0 | |
| F.Lopez | 12,200 | 2,000 | 200 | 153 | 0 | 0 | |
| A.Daniels | 106,300 | 13,100 | 1,310 | 946.35 | 0 | 0 | note 1 |
| B.Kingston | 111,100 | 16,900 | 1,690 | 703.85 | 0 | 0 | note 2 |
| Total | $250,800 | 34,800 | 3,480 | 2,017.40 | 3.00 | 2.40 |
note 1 : A. Daniels FICA = (118,500 -106,300)*7.65% + (106,300 +13,100 – 118,500)*1.45%
=>12,200 * 7.65% + 900*1.45% =>$946.35.
note 2: B.Kingston = (118,500 – 111,100) *7.65% + (111,100 +16,900 – 118,500)*1.45%
=>$703.85.
2.entry to record the payment of payroll:
| Wages and salaries expense | 34,800 | |
| ………….To with holding taxes payable | 3,480 | |
| …………..To FICA taxes payable | 2,017.40 | |
| …………..To cash a/c | 29,302.60 |
c.record the payroll tax expenses
| Payroll tax expense | 2,022.80 | |
| …………To FICA tax payable | 2,017.40 | |
| …………To Federal unemployment tax | 3.00 | |
| …………To state unemployment tax | 2.40 |
d.record the payment of payroll liabilities created.
| Withholding taxes payable | 3,480 | |
| FICA taxes payable | 2,017.40 | |
| Federal unemployment taxes payable | 2.40 | |
| State unemployment taxes payable | 3.00 | |
| …………To Cash a/c | 5,502.80 |
