Accounting-step by step explanation?

-1. An employee receives an hourly rate of $40, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; cumulative earnings for year prior to current week, $99,700; social security tax rate, 6.0% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings. What is the gross pay for the employee?

a.$775.00

b.$1,840.00

c.$1,960.00

d.$1,562.60



2. The following totals for the month of June were taken from the payroll register of Arcon Company:





Salaries expense $14,000

Social security and Medicare Taxes withheld 975

Income Taxes withheld 2,600

Retirement Savings 1,000





The entry to record the payment of net pay would include a





(a). debit to Salaries Payable for $14,000



(b). Debit to Salaries Payable for $9,425



(c). Credit to Salaries Expense for $9,425



(d). Credit to Salaries Payable for $9,4251) This question is trying to confuse you with all the added information. At the very end of the question it asks for the GROSS pay. So there's no need to worry about deductions.

40 hours x $40 per hour = $1,600

6 hours x $60 = $360

1,600 + 360 = c.$1,960.00



2) This is another trick question. The question is asking for the entry to record the actual payment.

This is the journal entry to record the accrual of the salaries.

Dr Salaries expense 14,000

Cr Social security and Medicare Taxes Payable 975

Cr Income Tax Payable 2,600

Cr Retirement Savings Payable 1,000

Cr Salaries Payable 9,425



However, the salaries have not actually been paid yet. The entry to record the payment would be:

Dr Salaries Payable 9,425

Cr Cash 9,425



(b). Debit to Salaries Payable for $9,425