Reference no: EM13925713

The following information is available for the employees of Hoover Company for the first week of January 2013:

1. Tom earns $32 per hour and 1½ times his regular rate for hours over 40 per week. Tom worked 46 hours the first week in January. Tom's federal income tax withholding is equal to 10 percent of his gross pay. Hoover pays medical insurance of $75 per week for Tom and contributes $50 per week to a retirement plan for him.

2. Drake earns a weekly salary of $1,200. Drake's federal income tax withholding is 15 percent of his gross pay. Hoover pays medical insurance of $110 per week for Drake and contributes $100 per week to a retirement plan for him. 

3. Vacation pay is accrued at the rate of 1/4 of the regular pay rate per hour for Tom and $60 per week for Drake. Assume the Social Security tax rate is 6 percent on the first $110,000 of salaries and the Medicare tax rate is 1.5 percent of total salaries. The state unemployment tax rate is 4.2 percent and the federal unemployment tax rate is .8 percent of the first $7,000 of salary for each employee.

Required: 

a. Compute the gross pay for Tom for the first week in January. 

b. Compute the net pay for both Tom and Drake for the first week in January. 

c. Prepare the journal entry to record the payment of the payroll for the week. 

d. Prepare the journal entry to record the payroll tax expense and fringe benefit expense for Hoover for the week. 

e. What is the total cost of compensation expense for the first week of January 2013 for Hoover Company?