Lightning Electronics is a midsize manufacturer of lithium batteries. The company’s payroll records for the November 1–14 pay period show that employees earned wages totaling $50,000 but that employee income taxes totaling $7,000 and FICA taxes totaling $2,625 were withheld from this amount. The net pay was directly deposited into the employees’ bank accounts. Required: What was the amount of net pay? Assuming Lightning Electronics also must pay $250 of unemployment taxes for this pay period, what amount would be reported as the total payroll costs?

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monica789412 monica789412 · Answer 1 · 2020-04-21T08:29:59+02:00

the amount of net pay is $40,375, The amounted reported as the total payroll costs is $2,875

Explanation:

The Journal entries for the wages expense is mentioned below

Wages expense A/c.........................Dr $50,000

Income Tax Payable A/c................Cr $7,000

FICA taxes payable A/c...................Cr $2,625

Cash A/c...............................................Cr $40,375

We know that ,

Cash = Wage expense - Income tax payable - FICA taxes payable

= $50,000 - $7,000 - $2,625

= $40,375

Thus , the amount of net pay is $40,375

The Journal entry for the payroll expenses is mentioned below

Payroll tax expense A/c............................Dr $2,875

FICA taxes payable A/c............................Cr $2,625

Unemployment taxes payable A/c.........Cr $250

The total payroll costs $2,875

abiolataiwo2015 abiolataiwo2015 · Answer 2 · 2021-11-16T12:23:40+01:00

Based on the information given the amount of net pay is $40,375.

The amount that would be reported as the total payroll costs is $52,875.

1. Net pay

Gross Salaries & Wages $50,000

Employee Income Tax Withheld ($7,000)

Employee FICA Withheld ($2,625)

Net Pay $40,375

2. Total payroll costs

Gross pay $50,000

Employee FICA Withheld $2,625

Unemployment taxes $250

Total payroll costs $52,875

Inconclusion the amount of net pay is $40,375 and the amount that would be reported as the total payroll costs is $52,875.

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