A company's sales personnel earned salaries of $15,000 during the pay period December 5-10, all of which were subject to 1.66% EI withholdings. All employees had reached the annual maximum earnings for the Canada Pension Plan. In addition, the company has agreed with its employees to withhold the following amounts: $900 for hospital insurance, $2,600 for federal and provincial income taxes, and $180 for union dues. Calculate the general journal entry credit amount on December 10 to "Salaries Payable."

Question

Quizplus · Accepted Answer

First, we need to calculate the total amount of deductions:
- EI withholdings: $15,000 x 1.66% = $249
- Hospital insurance: $900
- Federal and provincial income taxes: $2,600
- Union dues: $180

Total deductions: $3,929

The net pay will be the total earnings minus the total deductions:
Net pay = $15,000 - $3,929 = $11,071

The company must credit the Salaries Payable account for the net pay amount. Therefore, the general journal entry credit amount on December 10 to "Salaries Payable" will be $11,071.00.

A Company's Sales Personnel Earned Salaries of $15,000 During the Pay