Question: Computing and journalizing payroll amounts Larry Walsh is general manager of Moonwalk Salons. During 2016, Walsh worked for the company all year at a $11,800 monthly salary. He also earned a year-end bonus equal to 20% of his annual salary. Walsh's federal income tax withheld during 2016 was $1,770 per month, plus $4,248 on his bonus check. State income tax withheld came to $90 per month, plus $70 on the bonus. FICA tax was withheld on the annual earnings. Walsh authorized the following payroll deductions: Charity Fund contribution of 2% of total earnings and life insurance of $30 per month. Moonwalk incurred payroll tax expense on Walsh for FICA tax. The company also paid state unemployment tax and federal unemployment tax.
Requirements: 1. Compute Walsh's gross pay, payroll deductions, and net pay for the full year 2016. Round all amounts to the nearest dollar.
2. Compute Moonwalk's total 2016 payroll expense for Walsh.
3. Make the journal entry to record Moonwalk's expense for Walsh's total earnings for the year, his payroll deductions, and net pay. Debit Salaries Expense and Bonus Expense as appropriate. Credit liability accounts for the payroll deductions and Cash for net pay. An explanation is not required.
4. Make the journal entry to record the accrual of Moonwalk's payroll tax expense for Walsh's total earnings.