Question

The following information about the payroll for the week ended December 30 was obtained from the...

The following information about the payroll for the week ended December 30 was obtained from the records of Boltz Co.:

Salaries: Deductions: 
Sales salaries$540,000Income tax withheld$160,000
Warehouse salaries155,000U.S. savings bonds10,500
Office salaries85,000Group insurance9,000
 $780,000  

 

    
Tax rates assumed:
Social security6%State unemployment (employer only)5.4%
Medicare1.5%Federal unemployment (employer only)0.8%

 

 Required:
1.Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries (refer to the Chart of Accounts for exact wording of account titles): a. December 30, to record the payroll. b. December 30, to record the employer’s payroll taxes on the payroll to be paid on December 31. Of the total payroll for the last week of the year, $48,000 is subject to unemployment compensation taxes.
2.Assuming that the payroll for the last week of the year is to be paid on January 5 of the following fiscal year, journalize the following entries (refer to the Chart of Accounts for exact wording of account titles): On page 11 of the journal: December 30, to record the payroll. On page 12 of the journal: January 5, to record the employer's payroll taxes on the payroll to be paid on January 5. Since it is a new fiscal year, all $780,000 in salaries is subject to unemployment compensation taxes.
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Answer #1

1

a.

Dec.

30

Sales Salaries Expense

$ 540,000

Warehouse Salaries Expense

$ 155,000

Office Salaries Expense

$ 85,000

Employees Income Tax Payable

$ 160,000

Social Security Tax Payable ($780,000 * 6%)

$ 46,800

Medicare Tax Payable ($780,000 * 1.5%)

$ 11,700

Bond Deductions Payable

$ 10,500

Group Insurance Payable

$ 9,000

Salaries Payable

$ 542,000

b.

Dec.

30

Payroll Tax Expense

$ 61,476

Social Security Tax Payable

$ 46,800

Medicare Tax Payable

$ 11,700

State Unemployment Tax Payable ($48,000*5.4%)

$ 2,592

Federal Unemployment Tax Payable ($48,000 * 0.8%)

$ 384

2

a.

Dec.

30

Sales Salaries Expense

$ 540,000

Warehouse Salaries Expense

$ 155,000

Office Salaries Expense

$ 85,000

Employees Income Tax Payable

$ 160,000

Social Security Tax Payable ($780,000 * 6%)

$ 46,800

Medicare Tax Payable ($780,000 * 1.5%)

$ 11,700

Bond Deductions Payable

$ 10,500

Group Insurance Payable

$ 9,000

Salaries Payable

$ 542,000

b.

Dec.

30

Payroll Tax Expense

$ 106,860

Social Security Tax Payable

$ 46,800

Medicare Tax Payable

$ 11,700

State Unemployment Tax Payable ($780,000*5.4%)

$ 42,120

Federal Unemployment Tax Payable ($780,000 * 0.8%)

$ 6,240

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