Gloria Rose works at College of Austin and is paid $ 30 per hour for a 40-hour workweek and time-and-a-half for hours above 40. LOADING...(Click the icon to view payroll tax rate information.) Requirements 1. Compute Rose's gross pay for working 60 hours during the first week of February. 2. Rose is single, and her income tax withholding is 20 % of total pay. Rose's only payroll deductions are payroll taxes. Compute Rose's net (take-home) pay for the week. Assume Rose's earnings to date are less than the OASDI limit. 3. Journalize the accrual of salaries and wages expense and the payments related to the employment of Gloria Rose. Requirement 1. Compute Rose's gross pay for working 60 hours during the first week of February. Gross Pay

Answer and Explanation:

1. The gross pay is

Straight time pay

= 40 hours × $30 per hour

= $1,200

overtime pay

= 40 hours × $30 per hour × 1.5

= $1,800

So, the total gross pay is

= $1,200 + $1,800

= $3,000

2. Now the net take home pay is

Gross pay                        $3,000

Less: deductions

Income tax withholding (20%)  -$600

Employee OASDI tax (6.2%)  -$186

Employee medicare tax (1.45%) -$43.50

Net take home pay $2,170.50

3. Now the journal entries are

Wages expense $3,000

             To Income tax payable $600

             To Employee OASDI tax payable $186

             To Employee medicare tax payable $43.50

             To wages payable $2,170.50

(Being the wages expense is recorded)

We debited the expenses as it increased the expenses and credited all liabilities it increased the liabilities  

Wages payable Dr $2,170.50

         To cash  $2,170.50

(being cash paid is recorded)

For recording this we debited the wages payable as it reduced the liabilities and credited the cash as it also reduced the current assets

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