Carson Company is a small manufacturing firm located in Altamont, Utah. The company has a workforce of both hourly and salaried employees. Each employee is paid for hours actually worked during each week, with the time worked being recorded in quarter-hour increments. Wages are paid every Friday for the week preceding. The payday for Carson Company for the work week ending Friday, December 31, 2021, is January 7, 2022. The information below will be used in preparing the payroll for the pay period ending December 31, 2021:

Time Card No.Employee NameHourly Wage or SalaryPerTime Report for the week ended Dec. 31, 2021
$SatSunMonTueWedThurFriTotal
Kettleson, Ron17.50Per hour8888840
Little, Maxine17.25Per hour88888848
Utah, Harley18.10Per hour85 1/288837 1/2
Riffle, John17.90Per hour1010881046
Jones, Lucy19.75Per hour8888840
Short, Martin3,350Per month8888840
Haney, Albert2,510Per month48888844
Carson, Francis52,000Per year8888840

Instructions

  1. Complete the Regular Earnings columns (Rate per Hour and Amount) and the Overtime Earnings columns (Rate per Hour and Amount) for each hourly employee.
  2. Record the Total Earnings for each employee by adding the Regular Earnings and the Overtime Earnings.
  3. In the Taxable Earnings columns, record the amount of each employee’s weekly earnings that is subject to FICA taxes. FICA is composed of Social Security’s Old-Age, Survivors, and Disability Insurance (OASDI) at 6.2% and Health Insurance (HI) at 1.45%. Assume the cap for OASDI in 2021 was $137,700 and there is no earnings limit for HI.
  4. Record the state income taxes on the gross weekly earnings for each employee. Assume the tax rate for Utah is 4.95% and withholding is at that rate.
  5. Calculate FUTA at the statutory rate of 0.6% on the first $7,000 of earnings and calculate SUTA at 3.689% of the first $36,600 of earnings.
  6. Create the journal entries for wages payable and payroll taxes payable.
  7. Assume the wages are paid on January 8, 2022. Record the journal entry for that transaction.