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Chapter 12 payroll accounting 308 337ch12868829indd

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Unformatted text preview: and one major disadvantage, from the employee’s point of view, for each type of deduction. Add as many answer rows as needed. Do the Math As the president of Creative Craft Memory Books, you have decided to add five new sales consultants to your sales force. You offer these sales consultants a gross salary of $23,000 each, but the consultants will not take home $23,000. Calculate the FICA taxes to be withheld from each consultant’s gross pay. What remains of their gross pay after you deduct FICA taxes? Problem 12–2 Determining Taxes on Gross Earnings Information related to the just-completed pay period of MegaCom Computer Upgrades is provided in the following chart. Determine the amounts to be withheld from each employee’s gross earnings for FICA and income taxes. It is a weekly pay period, so use the tables on page 317 to determine the amount of federal income tax to be withheld. The state income tax is 2% of gross earnings. The social security tax rate is 6.2%, and the Medicare tax rate is 1.45%. Use the format shown in your working papers. Employee Marital Status Cleary, Kevin S Halley, James S Hong, Kim S Jackson, Marvin M Sell, Richard M Total Allowances 0 1 0 1 2 Gross Earnings $155.60 184.10 204.65 216.40 196.81 $957.56 Problem 12–3 Analyzing a Source Document Examine the following partially completed payroll check stub. The employee, Melanie Galvin, is single and claims one allowance. What amount should be deducted for: 1. Medicare 260 tax? Earnings Deductions 2. Social Period Net Ending Pay Security tax? 3. Federal 1/15/20-- 315.00 315.00 Income tax? Employee Pay Statement Detach and retain this statement. Social Regular Overtime Total Security Tax Med. Tax Federal State Income Income Tax Tax Hosp. Ins. Other Total Section 2 Payroll Deductions 308-337_CH12_868829.indd 319 319 9/15/05 11:45:35 AM Payroll Records SECTION 3 BEFORE YOU In the previous sections you learned how to calculate gross earnings and deductions. Now you will learn how to compute net pay, prepare the pay...
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