Question

Dixon Sales has seven sales employees that receive weekly paychecks. Each earns $15 per hour and each has worked 40 hours in the pay period. Each employee pays 12% of gross in federal income tax, 3% in state income tax, 6.0% of gross in social security tax, 1.5% of gross in Medicare tax, and 0.5% in state disability insurance. Required: Journalize the recognition of the pay period ending January 19 that will be paid to the employees January 26. Refer to the Chart of Accounts for exact wording of account titles. Round your answers to two decimal places.

Answer 1

Journal Entry	Debit ($)	Credit ($)	Explanations
Sales wages expense	4,200		(7*15*40)
Federal income tax payable		504	(4200 *12%)
State income tax payable		126	(4200 * 3%)
Social security tax payable		252	(4200 * 6%)
Medicare tax payable		63	(4200 *1.5%)
State disability insurance		21	(4200*0.5%)
Sales wages payable		3,234	Wages less above deduction
(To record wages payable)

This is weekly payment with 40 weekly hours. 7 sales employees each earning 15 per hour for 40 hours totals 4200 which needs to be taxed and the balance shall be paid to employee.

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