PR 11-2B Entries for payroll and payroll taxes

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


Salaries: Deductions:
Sales salaries $546,000 Income tax withheld $172,480
Warehouse salaries 116,000 Social security tax withheld 52,800
Offi ce salaries 218,000 Medicare tax withheld 13,200
$880,000 U.S. savings bonds 26,400
Group insurance 39,600
$304,480
Tax rates assumed:
Social security, 6%
Medicare, 1.5%
State unemployment (employer only), 4.0%
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, $26,000 is subject to unemployment compensation taxes.

2. Assuming that the payroll for the last week of the year is to be paid on January 4 of the following fiscal year, journalize the following entries:

a. December 30, to record the payroll.
b. January 4, to record the employer’s payroll taxes on the payroll to be paid on January 4. Since it is a new fiscal year, all $880,000 in salaries is subject to unemployment compensation taxes.


Answer:

1. a. Dec. 30 Sales Salaries Expense ............................... 546,000
 Warehouse Salaries Expense ..................... 116,000
 Office Salaries Expense .............................. 218,000
 Employees Income Tax Payable............ 172,480
 Social Security Tax Payable .................. 52,800
 Medicare Tax Payable ............................ 13,200
 Bond Deductions Payable...................... 26,400
 Group Insurance Payable....................... 39,600
 Salaries Payable ..................................... 575,520
 b. Dec. 30 Payroll Tax Expense .................................... 67,248
 Social Security Tax Payable .................. 52,800
 Medicare Tax Payable ............................ 13,200
 State Unemployment Tax Payable ........ 1,0401
 Federal Unemployment Tax Payable..... 2082
 1
$26,000 × 4.0%
 2
$26,000 × 0.8%
2. a. Dec. 30 Sales Salaries Expense ............................... 546,000
 Warehouse Salaries Expense ..................... 116,000
 Office Salaries Expense .............................. 218,000
 Employees Income Tax Payable............ 172,480
 Social Security Tax Payable .................. 52,8003
 Medicare Tax Payable ............................ 13,2004
 Bond Deductions Payable...................... 26,400
 Group Insurance Payable....................... 39,600
 Salaries Payable ..................................... 575,520
 3
$880,000 × 6%
 4
$880,000 × 1.5%
 b. Jan. 4 Payroll Tax Expense .................................... 108,240
 Social Security Tax Payable .................. 52,800
 Medicare Tax Payable ............................ 13,200
 State Unemployment Tax Payable ........ 35,2005
 Federal Unemployment Tax Payable..... 7,0406
 5
$880,000 × 4.0%
 6
$880,000 × 0.8% 

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