Reference no: EM131623486

Exercise 1: During the past week, four employees of the Kinko Inc. worked the number of hours shown in the table. All four employees receive overtime pay at one and a half times their regular hourly rate for any hours worked beyond 40 in a week. Calculate the regular earnings, overtime earnings, and gross pay for each employee.

Employee	Hourly Rate	Hours Worked	Regular Earnings	Overtime Earnings	Gross Pay
Kristen Wedge	$15	42	$600	$30	$630
Arnold Bodkin	17	45	680	85	765
Andrea Landowska	18	43	720	54	774
Kris Castro	16	41	640	16	656
Total		171	2,640	185	$2,825

Exercise 2. The monthly wages for December, 2016 and the year-to-date earnings as of November 30 for the three employees of the Raton Inc. are listed in the table below.

Requirements:

1. Calculate the amount of FICA: Social security tax and Medicare tax to be withheld from each of the employee's gross (December only). Apply a 6.2 percent as a social security tax rate using the annual limit of the contribution and benefit base. For earnings in 2016, this base is $118,500.  Also, apply a 1.45 percent as a Medicare tax rate.

Employee	December Salary	The year-to- date earnings up to November	Social Security Tax (December, 2016)	Medicare Tax (December, 2016)
Kristen Wedge	$2,400	$26,400	$148.8	$34.8
Manuel Ergo	11,800	129, 800	0	171.1
Ewe Raiden	9,500	114,000	279	137.75

Explanation:

1. Kristen Wedge Social Sec. Tax: $2,400 * 6.2% = $148.8 Medicare Tax : $2,400 * 1.45%= $34.8

2. Manuel Ergo: Social Sec. Tax: $0= $0 (he reached the maximum> $118,500) Medicare Tax : $11,800 * 1.45%= $171.1

3. Ewe Raiden: Social Sec. Tax: ($118,500 - $114,000) * 6.2% = $279 Medicare Tax : $9,500 * 1.45%= $137.75

Exercise 3. Lola Company's accounting year ends on December 31, 2016. On December 1, Lola signs a note for $12,000, 90-day, and 5% interest. Record (in General Journal) the note, the accrual of interest on December 31 and its payment on March 1 of the next year.