Part -1
Louis Welch is general manager of United Tanning Salons. During 2012, Welch worked for the company all year at a $6,200 monthly salary. He also earned a year-end bonus equal to 10% of his salary.
Welch's federal income tax withheld during 2012 was $850 per month, plus $924 on his bonus check. State income tax withheld came to $70 per month, plus $40 on the bonus. The FICA tax withheld was 7.65% of the first $106,800 in annual earnings. Welch authorized the following payroll deductions: Charity Fund contribution of 1% of total earnings and life insurance of $5 per month.
United incurred payroll tax expense on Welch for FICA tax of 7.65% of the first $106,800 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, United provides Welch with health insurance at a cost of $150 per month. During 2012, United paid $4,000 into Welch's retirement plan.
Requirements
1. Compute Welch's gross pay, payroll deductions, and net pay for the full year 2012. Round all amounts to the nearest dollar.
2. Compute United's total 2012 payroll expense for Welch.
3. Make the journal entry to record United's expense for Welch's total earnings for the year, his payroll deductions, and net pay. Debit Salary expense and Bonus expense as appropriate. Credit liability accounts for the payroll deductions and Cash for net pay. An explanation is not required.
Part -2
2011
Jan 9 Purchased computer equipment at a cost of $9,000,
signing a six-month, 6% note payable for that amount.
29 Recorded the week's sales of $64,000, three-fourths on credit, and one-fourth for cash. Sales amounts are subject to a 6% state sales tax.
Feb 5 Sent the last week's sales tax to the state.
28 Borrowed $204,000 on a four-year, 10% note payable that calls for $51,000 annual installment payments
plus interest. Record the current and long-term portions of the note payable in two separate accounts.
Jul 9 Paid the six-month, 6% note, plus interest, at maturity.
Aug 31 Purchased inventory for $12,000, signing a six-month, 9% note payable.
Dec 31 Accrued warranty expense, which is estimated at 2% of sales of $603,000.
31 Accrued interest on all outstanding notes payable. Make a separate interest accrual for each note payable.
2012
Feb 28 Paid the first installment and interest for one year on the four-year note payable.
29 Paid off the 9% note plus interest at maturity.
Requirement
1. Journalize the transactions in Denver's general journal. Explanations are not required.