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-   -   Compute bonuses and prepare journal entries (https://www.askmehelpdesk.com/showthread.php?t=343516)

  • Apr 19, 2009, 04:09 PM
    rbrumfield
    Compute bonuses and prepare journal entries
    Chris Anger is the president of Anger Company, and his brother, George Anger, is the vice president. Their compensation package includes bonuses of 5% for Chris Anger and 4% for George Anger of net income that exceeds $325,000. Net income for the year 2009 has just been computed to be $745,000.
    1. Compute the amount of bonuses to be paid to Chris and George Anger.
    2. Prepare the journal entries to record the accrual and payment of the bonuses.
    Summarize all withholding taxes related to the bonuses in an account called Various
    Taxes Payable. Taxes payable on the bonuses total $8,400 for Chris and $6,720 for
    George.
  • Apr 19, 2009, 04:30 PM
    dawgsnkats

    745K-325K= 420K as the basis over 325K. Chris =420X5% or 21K and George=420x4% or 16,800.

    Accrual Entry is: Bonuses Expense 37,800
    Various Taxes Payable 15,120
    Cash 22,680
  • Apr 19, 2009, 04:31 PM
    dawgsnkats
    Sorry, Bonus is debited, Taxes and Cash are credited.

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