Monthly Payroll Entries
Aggie Co. sells agricultural products. Aggie pays its salespeople a salary plus a commission.
The salary is the same for each salesperson, $1,000 per month. The commission varies by length of employment and is a percentage of the company's total gross sales. Each salesperson starts with a commission of 1.0%,which is increased an additional 0.5% for each full year of employment with Aggie, to a maximum of 5.0%. The total gross sales for the month of January were $120,000. Aggie has six salespeople as follows:
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Number of Years Employment
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Frank
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10
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Sally
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9
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Tina
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8
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Barry
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6
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|
Mark
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3
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|
Lisa
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075
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Assume that the FICA rate is 7.65%, the FUTA rate is 6.2%, and the state unemployment rate is 5.4%. (Assume that the federal government allows the maximum credit for state unemployment tax paid.) The federal income tax withholding rate is 30%. Compute the January salaries and commissions expense, and make any necessary entries to record the payroll transactions including cash payment of all the taxes payable.