The following information is available concerning The Blue Collar Company's payroll for November, 2009:
Employee Date
of Hire October
Year to
Date Earnings November Earnings Federal Income Tax Withheld State Income Tax Withheld
Z. Allen 1/6/2002 $104,000 $10,600 $3,200 $250
G. Burns 9/1/2009 6,000 3,000 600 45
C. Gunn 5/1/2001 100,000 10,000 3,000 225
B. Stark 11/1/2001 0 3,500 700 55
K. Veil 3/1/2003 110,000 11,000 3,500 265
Blue Collar pays wages monthly.
The O.A.S.D.I. rate is 6.2% on the first $106,800 of earnings.
The Hospital Insurance tax is 1.45%.
The federal unemployment tax is 6.2% on the first $7,000 of earnings.
The state unemployment tax is 5.5% on the first $7,000 of earnings. However, because of Blue Collar's excellent merit rating, the rate has been reduced to 2.5%. Employees do not pay state unemployment taxes.
Instructions:
1) Prepare the journal entries necessary to record the November payroll and all taxes.