Response to the following problem:
Jan Summers is a vice president at Harbor State Bank in Boston. During 20X5, she worked for the bank all year at a $6,500 monthly salary. She also earned a year-end bonus equal to 15% of her annual salary
Summers' federal income tax withheld during 20X5 was $820 per month, plus $2,480 on her bonus check. State income tax withheld came to $60 per month, plus $80 on the bonus. The FICA tax withheld was 8% of the first $87,000 of annual earnings. Summers authorized the following payroll deductions: United Fund contribution of 1% of total earnings and life insurance of $20 per month.
Harbor State Bank incurred payroll tax expense on Summers for FICA tax of 8% of the first $87,000 in total annual earnings. The bank also paid state unemployment tax of 5.4% and federal unemployment tax of 0.8% on the first $7,000 in annual earnings. The bank provided Summers with the following benefits: health insurance at a cost of $40 per month, and pension benefits to be paid to Summers during her retirement. During 20X5, the bank's cost of Summers' pension program was $4,000.
Required:
1. Compute Summers' gross pay, payroll deductions, and net pay during 20X5. Round all amounts to the nearest dollar.
2. Compute the bank's total 20X5 payroll cost for Summers.
3. Prepare the bank's summary general journal entries to record its expense for:
a. Summers' 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 for Summers. Credit liability accounts.
c. Benefits provided to Summers. Credit a liability account.
Explanations are not required.