SHORT ANSWER QUESTIONS, EXERCISES, AND PROBLEMS
Example 1: Regular Earnings, Overtime Earnings, and Gross Pay
Exercise 1. During the past week, four employees of the Kinko Inc. worked
the number of hours shown in the table. All four employees receive overtime
pay at one and a half times their regular hourly rate for any hours worked
beyond 40 in a week. Calculate the regular earnings, overtime earnings, and
gross pay for each employee.
Employee Hourly
Rate
$15 Kristen
Wedge
Arnold
17
Bodkin
Andrea
18
Landowska
Kris Castro 16
Total Hours
Worked
42 Regular
Earnings
$600 Overtime
Earnings
$30 Gross Pay 45 680 85 765 43 720 54 774 41
171 640
2,640 16
185 656
$2,825 $630 Exercise 2. During the past week, four employees of the Lovo Inc. worked
the number of hours shown in the table. All four employees receive overtime
pay at one and a half times their regular hourly rate for any hours worked
beyond 40 in a week. Calculate the regular earnings, overtime earnings, and
gross pay for each employee.
Employee
Ann We
Gregory
Box
Dan Knox
Lana
Gonzales
Total Hourly
Rate
$18
19 Hours
Worked
45
44 19
17 43
46
178 Regular
Earnings
$ Overtime
Earnings
$ Gross Pay
$ $ Exercise 3. During one week, two employees of the Retro Furniture Inc.
worked the number of hours shown in the table. All four employees receive
overtime pay at one and a half times their regular hourly rate for any hours
worked beyond 40 in a week. Calculate the regular earnings, overtime earnings, and gross pay for each employee.
Employee
Megan
Dell
Max Levy
Total Hourly
Rate
$16.5 Hours
Worked
47 19.25 43
178 Regular
Earnings
$ Overtime
Earnings
$ Gross Pay
$
$ Example 2: Social Security and Medicare Tax Computation
Exercise 4.The monthly wages for December, 2016 and the year-to-date
earnings as of November 30 for the three employees of the Raton Inc. are
listed in the table below.
Requirements:
1. Calculate the amount of FICA: Social security tax and Medicare tax to be
withheld from each of the employee's gross (December only). Apply a 6.2
percent as a social security tax rate using the annual limit of the
contribution and benefit base. For earnings in 2016, this base is
$118,500. Also, apply a 1.45 percent as a Medicare tax rate.
Employee December
Salary Social
Security Tax
(December,
2016)
$148.8 Medicare Tax
(December,
2016) $2,400 The year-todate
earnings up
to November
$26,400 Kristen
Wedge
Manuel Ergo
Ewe Raiden 11,800
9,500 129, 800
114,000 0
279 171.1
137.75 $34.8 Explanation:
1. Kristen Wedge Social Sec. Tax: $2,400 * 6.2% = $148.8
Medicare Tax : $2,400 * 1.45%= $34.8
2. Manuel Ergo: Social Sec. Tax: $0= $0 (he reached the maximum>
$118,500)
Medicare Tax : $11,800 * 1.45%= $171.1
3. Ewe Raiden: Social Sec. Tax: ($118,500 - $114,000) * 6.2% = $279
Medicare Tax : $9,500 * 1.45%= $137.75 Exercise 5. The monthly wages for December, 2016 and the year-to-date
earnings as of November 30 for the three employees of the Elegant Inc. are
listed in the table below.
Requirements:
2. Calculate the amount of FICA: Social Security Tax and Medicare Tax to be
withheld from each of the employee's gross (December only). Apply a 6.2
percent as a social security tax rate using the annual limit of the
contribution and benefit base. For earnings in 2016, this base is
$118,500. Also, apply a 1.45 percent as a Medicare tax rate.
Employee
December
The year-to- Social
Medicare Tax
Salary
date
Security Tax
(December,
earnings up
(December,
2016)
to November 2016)
Rod Cast
$2,900
$
$
$
Veronica
Ergo
Ann Lola 10,800
9,650 Exercise 6. The monthly wages for December, 2016 and the year-to-date
earnings as of November 30 for the three employees of the Elegant Inc. are
listed in the table below.
Requirements:
3. Calculate the amount of FICA: Social Security Tax and Medicare Tax to be
withheld from each of the employee's gross (December only). Apply a 6.2
percent as a social security tax rate using the annual limit of the
contribution and benefit base. For earnings in 2016, this base is
$118,500. Also, apply a 1.45 percent as a Medicare tax rate.
4.
Employee
December
The year-to- Social
Medicare Tax
Salary
date
Security Tax
(December,
earnings up
(December,
2016)
to November 2016)
Emma Lonk $4,500
$
$
$
Andrew Arlo
Babaduck
Brynn 10,700
9,750 Exercise 7. Letco Company’s accounting year ends on December 31, 2016.
On December 1, Letco signs a note for $10,000, 60-day, and 6% interest.
Record (in General Journal) the note, the accrual of interest on December 31
and its payment on February 1 of the next year.
Exercise 8. Lola Company’s accounting year ends on December 31, 2016.
On December 1, Lola signs a note for $12,000, 90-day, and 5% interest.
Record (in General Journal) the note, the accrual of interest on December 31
and its payment on March 1 of the next year.
Exercise 9. Minko Inc. had a payroll of $59,000 for the month of May. The
company withheld the following amounts from the employees’ pay: federal
income taxes $9,100; FICA taxes $4,514 (Social Security Tax= $3,658;
Medicare Tax= 856) ; and medical insurance premiums $4,940. Please,
record these payroll entries in the General Journal.
General Journal
Date Description/ Account Page: 5
Debit Credit Exercise 10. Elmo Inc. had a payroll of $77,550 for the month of
December. The company withheld the following amounts from the
employees’ pay: federal income taxes $15,100; FICA taxes $5,932 (Social
Security Tax= $4,808; Medicare Tax= 1,124) ; and medical insurance
premiums $7,940. Please, record these payroll entries in the General
Journal. General Journal
Date
Description/ Account Debit Page: 7
Credit Example 3: Payroll Computation
Exercise 11. During one week ended May 8, 2016, Arnold Hanover worked
40 hours. His regular hourly rate is $15. These earnings are subject to social
security tax at a rate of 6.2 percent and Medicare tax at a rate of 1.45
percent. This employee also has some deductions including: $51 for federal
income tax and $69 for health insurance.
Compute the following:
1. Gross pay for a week?
2. Total of the employee deductions for a week?
3. Net pay for this week?
Explanation:
1. Gross pay: 40* $15 = $640
2. Total deductions: Social Security Tax $39.68; Medicare Tax $9.28;
Federal Income Tax $51, and Health Insurance $69 =$168.96
3. Net Pay= $640-$168.96 = $471
Exercise 12. During one week ended April 7, 2016, Arnold Hanover worked
40 hours. His regular hourly rate is $17. These earnings are subject to social
security tax at a rate of 6.2 percent and Medicare tax at a rate of 1.45
percent. This employee also has some deductions including: $63 for federal
income tax and $87 for health insurance.
Compute the following:
1. Gross pay for a week?
2. Total of the employee deductions for a week?
3. Net pay for this week?

 

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