Response to the following problem:
Brenda Gates is vice president of finance for Transco Leasing. During 20X5, she worked for the company all year at a $6,625 monthly salary. She also earned a year-end bonus equal to 10% of her salary.
Gates's federal income tax withheld during 20X5 was $737 per month, plus $1,007 on her bonus check. State income tax withheld came to $43 per month, plus $27 on the bonus. The FICA tax withheld was 8.0% of the first $87,000 in annual earnings. Gates authorized the following payroll deductions: United Fund contribution of 1% of total earnings and life insurance of $19 per month.
Transco incurred payroll tax expense on Gates for FICA tax of 8% of the first $87,000 in annual earnings. The company also paid state unemployment tax of 5.4% and federal unemployment tax of 0.8% on the first $7,000 in annual earnings. In addition, Transco provides Gates with health insurance at a cost of $35 per month and pension benefits. During 20X5, Transco paid $7,000 into Gates's pension program.
Required:
1. Compute Gates's gross pay, payroll deductions, and net pay for the full year 20X5. Round all amounts to the nearest dollar.
2. Compute Transco's total 20X5 payroll cost for Brenda Gates.
3. Prepare Transco's summary general journal entries to record its expense for the following:
a. Gates's total earnings for the year, her payroll deductions, and her net pay. Debit Salary Expense and Executive Bonus Compensation as appropriate. Credit liability accounts for the payroll deductions and Cash for net pay.
b. Employer payroll taxes on Gates. Credit liability accounts.
c. Benefits provided to Gates. Credit a liability account. Explanations are not required.