Question

Recording Payroll and Payroll Taxes
The following data are taken from Stockton Wholesale Company’s May payroll:

Administrative salaries	$50,000
Sales salaries	51,000
Custodial salaries	7,000
Total payroll	$108,000
Salaries subject to 1.45 percent Medicare tax	$108,000
Salaries subject to 6.2 percent Social Security tax	85,000
Salaries subject to federal unemployment taxes	14,000
Salaries subject to state unemployment taxes	21,000
Federal income taxes withheld from all salaries	17,800

Assume that the company is subject to a two percent state unemployment tax (due to a favorable experience rating) and a 0.6 percent federal unemployment tax.

Required
Record the following in general journal form on May 31:
a. Accrual of the monthly payroll.
b. Payment of the net payroll.
c. Accrual of employer’s payroll taxes. (Assume that the FICA matches the amount withheld.)
d. Payment of these payroll-related liabilities. (Assume that all are settled at the same time.)

Round your answers to the nearest dollar.

General Journal
Date	Description	Debit	Credit
a.
May 31	Administrative Salaries Expense	Answer	Answer
	Sales Salaries Expense	Answer	Answer
	AnswerAdministrative Salaries ExpenseCashCustodial Salaries ExpenseFederal Income Tax Withholding PayableFederal Unemployment Tax PayableFICA Tax PayablePayroll PayablePayroll Tax ExpenseSales Salaries ExpenseState Unemployment Tax Payable	Answer	Answer
	Federal Income Tax Withholding Payable	Answer	Answer
	FICA Tax Payable	Answer	Answer
	AnswerAdministrative Salaries ExpenseCashCustodial Salaries ExpenseFederal Income Tax Withholding PayableFederal Unemployment Tax PayableFICA Tax PayablePayroll PayablePayroll Tax ExpenseSales Salaries ExpenseState Unemployment Tax Payable	Answer	Answer
	To record May payroll.
b.
May 31	AnswerAdministrative Salaries ExpenseCashCustodial Salaries ExpenseFederal Income Tax Withholding PayableFederal Unemployment Tax PayableFICA Tax PayablePayroll PayablePayroll Tax ExpenseSales Salaries ExpenseState Unemployment Tax Payable	Answer	Answer
	AnswerAdministrative Salaries ExpenseCashCustodial Salaries ExpenseFederal Income Tax Withholding PayableFederal Unemployment Tax PayableFICA Tax PayablePayroll PayablePayroll Tax ExpenseSales Salaries ExpenseState Unemployment Tax Payable	Answer	Answer
	To pay May net payroll.
c.
May 31	AnswerAdministrative Salaries ExpenseCashCustodial Salaries ExpenseFederal Income Tax Withholding PayableFederal Unemployment Tax PayableFICA Tax PayablePayroll PayablePayroll Tax ExpenseSales Salaries ExpenseState Unemployment Tax Payable	Answer	Answer
	FICA Tax Payable	Answer	Answer
	Federal Unemployment Tax Payable	Answer	Answer
	AnswerAdministrative Salaries ExpenseCashCustodial Salaries ExpenseFederal Income Tax Withholding PayableFederal Unemployment Tax PayableFICA Tax PayablePayroll PayablePayroll Tax ExpenseSales Salaries ExpenseState Unemployment Tax Payable	Answer	Answer
	To record employer's May payroll taxes.
d.
May 31	Federal Income Tax Withholding Payable	Answer	Answer
	AnswerAdministrative Salaries ExpenseCashCustodial Salaries ExpenseFederal Income Tax Withholding PayableFederal Unemployment Tax PayableFICA Tax PayablePayroll PayablePayroll Tax ExpenseSales Salaries ExpenseState Unemployment Tax Payable	Answer	Answer
	Federal Unemployment Tax Payable	Answer	Answer
	State Unemployment Tax Payable	Answer	Answer
	Cash	Answer	Answer
	To pay liabilities related to May payroll.

Answer 1

E K Rate Salaries Subject to Credit ($) 3 Administrative Salaries 4 Sales Salaries 5 Custodial Salaries 6 Total Payroll Amount ($) $50,000.00 $51,000.00 $7,000.00 $108,000.00 Debit ($) $50,000.00 $51,000.00 $7,000.00 $17,800.00 $6,836.00 =D9+D10 $83,364.00 $83.364.00 8 Deductions: 9 Medicare Tax 10 Social Security Tax 11 Federal unemployment Tax 12 State unemployment Tax 13 Federal Income Taxes 1.45% 6.20% 0.60% 2.00% $108,000.00 $85,000.00 $14,000.00 $21,000.00 $1,566.00 $5.270.00 $84.00 $420.00 $17,800.00 $83,364.00 F G H Journal Entries Date Description 31-May Administative Salaries Expense Sales Salaries Expense Custodial Salaries Expense Federal Income Tax Withholding Payable FICA Tax Payable Payroll Payable (To record May payroll 31-May Payroll Payable Cash (To record May net payroll) 31-May Payroll Tax Expense FICA Tax Payable Federal Unemployment Tax Payable State Unemployment Tax Payable (To record employer's May payroll taxes) 31-May Federal Income Tax Withholding Payable FICA Tax Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Cash (To pay liabilities related to May Payroll $6,920.00 $6,836.00 =D9+D10 $84.00 $420.00 =J7+J14 $17,800.00 $13,672.00 $84.00 $420.00 $31,976.00

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