Question

overstated, understated Assume that the Cole Designs Inc. financial statements

Brief Exercise 8-49 Payroll Taxes Sid's Grocery Store has 100 employees who eam a wage of $18.75 per hour. Each of Sid's employees has worked a total of 160 hours over the month of July. At the time of recording July's monthly payroll, the following amounts have been withheld: Federal income tax State income tax Social Security Medicare Charitable contributions Union dues $30,000 8,000 18,600 4,350 1% of gross pay 1% of gross pay Also, the unemployment tax rate is 2% and applies to all but $30,000 of the gross payroll. Required: 1. What is the amount of net pay recorded by Sid's?" $1,745,023 2. Make the journal entries to record the payroll. If an amount box does not require an entry, leave it blank Federal Income Taxes Withholding Payable State Income Taxes Withholding Payable Union Dues Payable

Answer 1

1	Gross pay (100*160*18.75)		$300000
	Less: Deduction
	Federal Income tax	$30000
	State income tax	$8000
	Social Security	$18600
	Medicare	$4350
	Charitable contribution (1% * 300000)	$3000
	Union dues	$3000
	Total Deduction		$66950
	Net pay		$233050
2	Salaries and wages expense	$300000
	Federal Income taxes withheld		$30000
	State income taxes withheld		$8000
	Social Security payable		$18600
	Medicare payable		$4350
	Charitable contribution payable		$3000
	Union dues payable		$3000
	Salaries and wages payable
	(record wages and liabilities)
	Payroll tax expense	$28350
	Social Security payable		$18600
	Medicare payable		$4350
	Unemployment tax payable		$5400
	(record employer payroll taxes)
	Note:
	Unemployment tax payable
	(2%* (300000-30000) = $5400