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Accruals and Deferrals

Question 1

Company DEF has three employees and does the payroll every Friday. Determine the gross pay, total deductions and net pay for each employee. Use the following for FICA: Cap = $100,000, rates are 6% for social security and 1.5% for Medicare.

Steve--worked 45 hours and earns $30/hour. His year to date earnings are $99,300. Besides FICA he has deductions of $250 for federal income tax, $125 for state income tax and $75 for union dues.

Mary---worked 45 hours and earns a salary of $52,000 per year. Her year to date earnings are $43,200. Besides FICA she has deductions of $185 in federal income tax, $100 for state income tax, and $40 for her medical insurance premium.

Pete----worked 30 hours and earns $20 per hour. His year to date earnings are $24,435. besides FICA he has deductions of $70 for federal income tax, $42 for state income tax and $25 for union dues.

Question 2
The following totals appear in the payroll register of Company ABC. of our employees. These are the totals of all employees.

Gross Pay..........................$25,000

Social security...................$1500

Medicare...........................$375

Federal income tax............$4500

State income tax...............$2000

Union dues.......................$150

Medical Premium..............$200

Total deductions..............$8725

Net Pay..........................$16,275

All employee wages are subject to FUT and SUT. Our SUT rate is 5% and our FUT rate is 1%.

Prepare the journal entries to record the payroll, pay the payroll, and record the payroll taxes.

Question 3
Provide the necessary adjusting entries for December 31

1. Wages owed to our employees totaled $2400.

2. Depreciation on our truck was $1200.

3. Supplies used for the period was $500

4. Insurance expired was $1300.

5. Income tax owed but not yet paid was $10,000.

Solution Summary

Accurals and deferrals are examined.

$2.19