General manager of united salons

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Reference no: EM13915898

Louis Welch is general manager of United Salons. During 2014, Welch worked for the company all year at a $10,200 monthly salary. He also earned a year-end bonus equal to 10% of his annual salary. Welch's federal income tax withheld during 2014 was $850 per month, plus $924 on his bonus check. State income tax withheld came to $70 per month, plus $40 on the bonus. FICA tax was withheld on the 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. The company also paid state unemployment tax and federal unemployment tax. In addition, United provides Welch with health insurance at a cost of $150 per month. During 2014, 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 2014. Round all amounts to the nearest dollar.

2. Compute United total 2014 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 Salaries Expense and Bonus Expense as appropriate. Credit liability accounts for the payroll deductions and Cash for net pay. An explanation is not required.

Reference no: EM13915898

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