Question

O Homework eBook eBook Calculator Print Item Instructions The following information about the payrol for the week ended December 30 was obtained from the records of Boltz Co. Salaries: Deductions: Sales salaries $350,000 Income tax withheld $117,000 Warehouse salaries 182,000 U.S. savings bonds Oflice salaries 136,000 Group insurance 5668,000 14,596 12,024 Tax rates assumed: Social security 6% State unemployment (employer only) 5.4% Medicare 1.5% 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)

Answer 1

Answer -

1. a. Answer -

Journal					Accounting Equation
Date	Description	Post. Ref.	Debit	Credit	Assets	Liabilities	Equity
Dec. 30	Sales salaries expense		$350000				↓
	Warehouse salaries expense		$182000				↓
	Office salaries expense		$136000				↓
	Employment income tax payable			$117000		↑
	Social security tax payable			$40080		↑
	Medicare tax payable			$10020		↑
	Bond deductions payable			$14696		↑
	Group insurance payable			$12024		↑
	Salaries payable			$474180		↑

Calculation:

Social security tax payable = $668000 * 6% = $40080

Medicare tax payable = $668000 * 1.5% = $10020

b. Answer -

Journal					Accounting Equation
Date	Description	Post. Ref.	Debit	Credit	Assets	Liabilities	Equity
Dec. 30	Payroll tax expense		$52208				↓
	Social security tax payable			$40080		↑
	Medicare tax payable			$10020		↑
	State unemployment tax payable			$1836		↑
	Federal unemployment tax payable			$272		↑

Calculation:

State unemployment tax payable = $34000 * 5.4% = $1836

Federal unemployment tax payable = $34000 * 0.8% = $272

2. a. Answer -

Journal					Accounting Equation
Date	Description	Post. Ref.	Debit	Credit	Assets	Liabilities	Equity
Dec .30	Sales salaries expense		$350000				↓
	Warehouse salaries expense		$182000				↓
	Office salaries expense		$136000				↓
	Employment income tax payable			$117000		↑
	Social security tax payable			$40080		↑
	Medicare tax payable			$10020		↑
	Bond deductions payable			$14696		↑
	Group insurance payable			$12024		↑
	Salaries payable			$474180		↑

Calculation:

Social security tax payable = $668000 * 6% = $40080

Medicare tax payable = $668000 * 1.5% = $10020

b. Answer -

Journal					Accounting Equation
Date	Description	Post. Ref.	Debit	Credit	Assets	Liabilities	Equity
Jan. 05	Payroll tax expense		$91516				↓
	Social security tax payable			$40080		↑
	Medicare tax payable			$10020		↑
	State unemployment tax payable			$36072		↑
	Federal unemployment tax payable			$5344		↑

Calculation:

State unemployment tax payable = $668000 * 5.4% = $36072

Federal unemployment tax payable = $668000 * 0.8% = $5344

Note - Liabilities increase when a credit entry is made to record payable. And all expense accounts are recorded as a decrease to owner’s equity.