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    rbrumfield's Avatar
    rbrumfield Posts: 2, Reputation: 1
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    #1

    Apr 19, 2009, 04:09 PM
    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.
    dawgsnkats's Avatar
    dawgsnkats Posts: 130, Reputation: 7
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    #2

    Apr 19, 2009, 04:30 PM

    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
    dawgsnkats's Avatar
    dawgsnkats Posts: 130, Reputation: 7
    Junior Member
    		  
    #3

    Apr 19, 2009, 04:31 PM
    Sorry, Bonus is debited, Taxes and Cash are credited.
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