Question

Blossom Hardware payroll for November 2020 is summarized below.

					Amount Subject to Payroll Taxes
						Unemployment Tax
Payroll		Wages Due		FICA		Federal		State
Factory		$121,300		$121,300		$36,400		$36,400
Sales		34,200		34,200		3,800		3,800
Administrative		32,700		32,700
Total		$188,200		$188,200		$40,200		$40,200

At this point in the year, some employees have already received wages in excess of those to which payroll taxes apply. Assume that the state unemployment tax is 2.5%. The FICA rate is 7.65% on an employee’s wages to $128,400 and 1.45% in excess of $128,400. Of the $188,200 wages subject to FICA tax, $22,000 of the sales wages is in excess of $128,400. Federal unemployment tax rate is 0.8% after credits. Income tax withheld amounts to $15,200 for factory, $6,900 for sales, and $6,000 for administrative.

Prepare a schedule showing the employer's total cost of wages for November by function. (Round answers to O decimal places, e.g. 5,275.) Administrative Sales Factory To Salaries $ $ and Wages FICA Taxes FUTA Taxes SUTA Taxes Total $ Cost $ $ $ List of Accounts Prepare the journal entries to record the factory, sales, and administrative payrolls including the employer's payroll taxes. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,125.) tA

Answer 1

ANSWER:

As per the given Question

Ans- Prepare the schedule of employer's total cost of wages as shown below:-

	Factory	Sales	Administrative	Total
Salaries and Wages	$121,300	$34,200	$32,700	$188,200
FICA Taxes	$9,279	$1,252	$2,502	$13,033
FUTA Taxes	$291	$30	-	$321
SUTA Taxes	$910	$95	-	$1,005
Total Cost	$131,780	$35,577	$35,202	$202,559

Working Note:-

1- Calculate the FICA, FUTA and SUTA taxes for factory wages as shown below:-

FICA Taxes= $121,300*7.65%	$9,279
FUTA Taxes = $36,400*0.8%	$291
SUTA Taxes= $36,400*2.5%	$910

The total taxes for factory wages are $10,480

2- Calculate the FICA, FUTA and SUTA taxes for Sales salaries as shown below:-

FICA Taxes ($34,200-$22,000)*7.65%+($22,000*1.45%)	$933+$319 =$1,252
FUTA Taxes ($3,800*0.8%)	$30
SUTA Taxes($3,800*2.5%)	$95

The total taxes foe sales salaries are $1,377.

3- Calculate the FICA, FUTA and SUTA taxes for administrative salaries as shown below:-

FICA Taxes= $32,700*7.65%= $2,502

There is no FUTA tax and SUTA tax on administrative salaries. Therefore, the total tax for administrative salaries is $2,502

Preparing the journal entries as shown below:-

Account Titles and Explanation	Debit ($)	Credit ($)
Factory Payroll:
Wages and Salaries Expenses	121,300
Withholding taxes payable		15,200
FICA payable		9,279
Cash		96,821
(To record salaries and wages expenses)
Payroll Tax Expense	10,480
FICA Payable		9,279
FUTA Payable		291
SUTA Payable		910
(To record the payroll expense)
Sales Payroll:
Wages and Salaries Expense	34,200
Withholding taxes payable		6,900
FICA Payable		1,252
Cash		26,048
(To record the salaries and wages expenses)
Payroll Tax Expense	1,377
FICA Payable		1,252
FUTA Payable		30
SUTA Payable		95
(To record the payroll expenses)
Administrative Payroll:
Wages and Salaries Expense	32,700
Withholding taxes payable		6,000
FICA Payable		2,502
Cash		24,198
(To record the salaries and wages expenses)
Payroll Tax Expense	2,502
FICA Payable		2,502
(To record the payroll expense)

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