Question

Question 2

Best Company has 7 sales employees, each of whom earns $1,800 semi-monthly. CPP is 5.25% and EI is 1.58%. Withholdings for the employees also include federal and provincial income tax of $2,300 (total for all seven) and medical insurance premiums of $185 for each employee.

1) Prepare the journal entry to record the employee payroll. 2) Prepare the journal entry to record Best Company's payroll tax expense. 3) Prepare the entry to remit the payroll taxes to the CRA and the medical insurance premium to the insurance company.

Answer 1

Note: Salaries and wages can be paid in cash also Employer contribution to El is 1.4 times the employee contribution Debit $12,600 1) Credit $1,800*7 $662 $199 $2,300 $1,295 $8,144 2) $940 Date Account Titles and Explanation Salaries and wages expense CPP payable Employee Insurance (El) payable Income tax payable Medical insurance payable Salaries and Wages payable (To record salaries and wages expense) Payroll tax expense CPP payable Employee Insurance (EI) payable (To record employer payroll tax expense) CPP payable Employee Insurance (El) payable Cash (To record remittance to CRA) Medical insurance payable Cash (To record remittance to insurance company) $6621 $279 3) $1,323 $478 $1,801 $1,295 $1,295