PR 11-2A Entries for payroll and payroll taxes

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



Salaries: Deductions:
Sales salaries $270,000 Income tax withheld $ 95,920
Warehouse salaries 142,000 Social security tax withheld 32,700
Offi ce salaries 133,000 Medicare tax withheld 8,175
$545,000 U.S. savings bonds 11,990
Group insurance 9,810
$158,595
Tax rates assumed:
Social security, 6%
Medicare, 1.5%
State unemployment (employer only), 4.5%
Federal unemployment (employer only), 0.8%



Instructions
1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries:

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, $30,000 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:

a. December 30, to record the payroll.

b. 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 $545,000 in salaries is subject to unemployment compensation taxes.


Answer:

1. a. Dec. 30 Sales Salaries Expense ............................... 270,000
 Warehouse Salaries Expense ..................... 142,000
 Office Salaries Expense .............................. 133,000
 Employees Income Tax Payable............ 95,920
 Social Security Tax Payable .................. 32,700
 Medicare Tax Payable ............................ 8,175
 Bond Deductions Payable...................... 11,990
 Group Insurance Payable....................... 9,810
 Salaries Payable ..................................... 386,405
 b. Dec. 30 Payroll Tax Expense .................................... 42,465
 Social Security Tax Payable .................. 32,700
 Medicare Tax Payable ............................ 8,175
 State Unemployment Tax Payable ........ 1,3501
 Federal Unemployment Tax Payable..... 2402
 1
$30,000 × 4.5%
 2
$30,000 × 0.8%
2. a. Dec. 30 Sales Salaries Expense ............................... 270,000
 Warehouse Salaries Expense ..................... 142,000
 Office Salaries Expense .............................. 133,000
 Employees Income Tax Payable............ 95,920
 Social Security Tax Payable .................. 32,7003
 Medicare Tax Payable ............................ 8,1754
 Bond Deductions Payable...................... 11,990
 Group Insurance Payable....................... 9,810
 Salaries Payable ..................................... 386,405
 3
$545,000 × 6%
 4
$545,000 × 1.5%
 b. Jan. 5 Payroll Tax Expense .................................... 69,760
 Social Security Tax Payable .................. 32,700
 Medicare Tax Payable ............................ 8,175
 State Unemployment Tax Payable ........ 24,5255
 Federal Unemployment Tax Payable..... 4,3606
 5$545,000 × 4.5%
 6$545,000 × 0.8% 

Popular posts from this blog

PR 9-2A Aging of receivables; estimating allowance for doubtful accounts

Image
Angler’s Dream Company supplies flies and fishing gear to sporting goods stores and outfitters throughout the western United States. The accounts receivable clerk for Angler’s Dream prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 2011: The following accounts were unintentionally omitted from the aging schedule: Customer                                            Due Date                        Balance  Antelope Sports & Flies                June 21, 2011                      $ 3,000  Big Hole Flies                               Aug. 30, 2011         ...
Read more

PR 10-5A Transactions for fixed assets, including sale

The following transactions, adjusting entries, and closing entries were completed by D. Hurd Furniture Co. during a three-year period. All are related to the use of delivery equipment. The double-declining-balance method of depreciation is used. 2010 Jan.  9. Purchased a used delivery truck for $30,000, paying cash. Mar. 17. Paid garage $400 for miscellaneous repairs to the truck. Dec. 31. Recorded depreciation on the truck for the year. The estimated useful life of the truck is four years, with a residual value of $6,000 for the truck. 2011 Jan.   2. Purchased a new truck for $48,000, paying cash. Aug   1. Sold the used truck for $12,500. (Record depreciation to date in 2011 for the truck.) Sept. 23. Paid garage $325 for miscellaneous repairs to the truck. Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $11,000 and an estimated life of fi ve years. 2012 July    1. Purchased a new truck for $52,000, paying cash. Oct.   ...
Read more

PR 9-1A Entries related to uncollectible accounts

Image
The following transactions were completed by Axiom Management Company during the current fiscal year ended December 31: Feb.  17. Received 25% of the $30,000 balance owed by Gillespie Co., a bankrupt business, and wrote off the remainder as uncollectible. Apr.  11. Reinstated the account of Colleen Bertram, which had been written off in the preceding year as uncollectible. Journalized the receipt of $4,250 cash in full payment of Colleen’s account. July  6. Wrote off the $9,000 balance owed by Covered Wagon Co., which has no assets. Nov. 20. Reinstated the account of Dugan Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $5,900 cash in full payment of the account. Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Kipp Co., $3,000; Moore Co., $4,000; Butte Distributors, $8,000; Parker Towers, $6,700.          31. Based on an analysis of the $1,200,000 of accounts receivabl...
Read more