Question

Zolnick Enterprises has two hourly employees: Kelly and Jon. Both employees earn overtime at the rate of 1.8 times the hourly rate for hours worked in excess of 42 per week. Assume the Social Security tax rate is 6 percent on the first $110,000 of wages, and the Medicare tax rate is 1.5 percent on all earnings. Federal income tax withheld for Kelly and Jon was $260 and $228, respectively. The following information is for the first week in January Year 1:

Employee	Hours Worked			Wage Rate per Hour
Kelly		54		$	21
Jon		49		$	26

Required
a. Calculate the gross pay for each employee for the week.
b. Calculate the net pay for each employee for the week.
c. Prepare the general journal entry to record payment of the wages.

Answer 1

Ans: 1. Gross Pay:

Particulars	Kelly	Jon
Regular Wages	=42*21	=42*26
	$882	$1,092
Overtime wages	=(54-42)*21*1.8	=(49-42)*26*1.8
	=453.60	=327.60
Total pay/Gross pay	$1,335.60	$1,419.6

	Kelly	Jon	Total
Gross pay	1,335.60	1,419.60	2,755.20
Less: Deductions
Social Security Tax(6%)	80.136	85.176	165.312
Medicare Tax(1.5%)	20.034	21.294	41.328
Federal Income taxes	260	228	488
Net Pay	975.43	1,085.13	2,060.56

C). Journal Entry to record payment of wages

Date	Account title and explanation	Debit($)	Credit($)
	Wages	2,755.20
	Cash		2,060.56
	Federal withholding		488.00
	Social Security Taxes payable		165.312
	Medicare taxes payable		41.328
	( to record payment of Wages )