Exercise 1: During the past week, four employees of the Kinko Inc. worked the number of hours shown in the table. All four employees receive overtime pay at one and a half times their regular hourly rate for any hours worked beyond 40 in a week. Calculate the regular earnings, overtime earnings, and gross pay for each employee.
|
Employee
|
Hourly Rate
|
Hours Worked
|
Regular Earnings
|
Overtime Earnings
|
Gross Pay
|
|
Kristen Wedge
|
$15
|
42
|
$600
|
$30
|
$630
|
|
Arnold Bodkin
|
17
|
45
|
680
|
85
|
765
|
|
Andrea Landowska
|
18
|
43
|
720
|
54
|
774
|
|
Kris Castro
|
16
|
41
|
640
|
16
|
656
|
|
Total
|
|
171
|
2,640
|
185
|
$2,825
|
Exercise 2. The monthly wages for December, 2016 and the year-to-date earnings as of November 30 for the three employees of the Raton Inc. are listed in the table below.
Requirements:
1. Calculate the amount of FICA: Social security tax and Medicare tax to be withheld from each of the employee's gross (December only). Apply a 6.2 percent as a social security tax rate using the annual limit of the contribution and benefit base. For earnings in 2016, this base is $118,500. Also, apply a 1.45 percent as a Medicare tax rate.
|
Employee
|
December Salary
|
The year-to- date earnings up to November
|
Social Security Tax (December, 2016)
|
Medicare Tax (December, 2016)
|
|
Kristen Wedge
|
$2,400
|
$26,400
|
$148.8
|
$34.8
|
|
Manuel Ergo
|
11,800
|
129, 800
|
0
|
171.1
|
|
Ewe Raiden
|
9,500
|
114,000
|
279
|
137.75
|
Explanation:
1. Kristen Wedge Social Sec. Tax: $2,400 * 6.2% = $148.8 Medicare Tax : $2,400 * 1.45%= $34.8
2. Manuel Ergo: Social Sec. Tax: $0= $0 (he reached the maximum> $118,500) Medicare Tax : $11,800 * 1.45%= $171.1
3. Ewe Raiden: Social Sec. Tax: ($118,500 - $114,000) * 6.2% = $279 Medicare Tax : $9,500 * 1.45%= $137.75
Exercise 3. Lola Company's accounting year ends on December 31, 2016. On December 1, Lola signs a note for $12,000, 90-day, and 5% interest. Record (in General Journal) the note, the accrual of interest on December 31 and its payment on March 1 of the next year.