PR 11-6B Payroll accounts and year-end entries
The following accounts, with the balances indicated, appear in the ledger of Codigo Co. on December 1 of the current year:
111 Salaries Payable — 118 Bond Deductions Payable $ 2,520
112 Social Security Tax Payable $ 6,847 119 Medical Insurance Payable 2,800
113 Medicare Tax Payable 1,763 411 Sales Salaries Expense 778,000
114 Employees Federal Income Tax Payable 10,873 511 Offi cers Salaries Expense 375,000
115 Employees State Income Tax Payable 9,874 611 Offi ce Salaries Expense 140,000
116 State Unemployment Tax Payable 1,400 618 Payroll Tax Expense 104,610
117 Federal Unemployment Tax Payable 400
The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December:
Dec. 1. Issued Check No. 615 to Canal Insurance Company for $2,800, in payment of the semiannual premium on the group medical insurance policy.
1. Issued Check No. 616 to Green Bank for $19,483, in payment for $6,847 of social security tax, $1,763 of Medicare tax, and $10,873 of employees’ federal income tax due.
2. Issued Check No. 617 for $2,520 to Green Bank to purchase U.S. savings bonds for employees.
12. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:
Salary distribution:
Sales $35,300
Offi cers 17,000
Offi ce 6,300 $58,600
Deductions:
Social security tax $ 3,516
Medicare tax 879
Federal income tax withheld 10,431
State income tax withheld 2,637
Savings bond deductions 1,260
Medical insurance deductions 467 19,190
Net amount $39,410
12. Issued Check No. 622 in payment of the net amount of the biweekly payroll.
12. Journalized the entry to record payroll taxes on employees’ earnings of December 12: social security tax, $3,516; Medicare tax, $879; state unemployment tax, $350; federal unemployment tax, $100.
15. Issued Check No. 630 to Green Bank for $18,635, in payment for $7,032 of social security tax, $1,758 of Medicare tax, and $10,431 of employees’ federal income tax due.
Dec. 26. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:
Salary distribution:
Sales $35,400
Offi cers 17,250
Offi ce 6,400 $59,050
Deductions:
Social security tax $ 3,543
Medicare tax 886
Federal income tax withheld 10,511
State income tax withheld 2,657
Savings bond deductions 1,260 18,857
Net amount $40,193
26. Issued Check No. 640 for the net amount of the biweekly payroll.
26. Journalized the entry to record payroll taxes on employees’ earnings of December 26: social security tax, $3,543; Medicare tax, $886; state unemployment tax, $170; federal unemployment tax, $45.
30. Issued Check No. 651 for $15,168 to State Department of Revenue, in payment of employees’ state income tax due on December 31.
30. Issued Check No. 652 to Green Bank for $2,520 to purchase U.S. savings bonds for employees.
31. Paid $61,600 to the employee pension plan. The annual pension cost is $72,800. (Record both the payment and the unfunded pension liability.)
Instructions
1. Journalize the transactions.
2. Journalize the following adjusting entries on December 31:
a. Salaries accrued: sales salaries, $10,620; officers salaries, $5,175; office salaries, $1,920. The payroll taxes are immaterial and are not accrued.
b. Vacation pay, $14,840.
Answer:
1.
Dec. 1 Medical Insurance Payable.................................. 2,800
Cash................................................................. 2,800
1 Social Security Tax Payable................................ 6,847
Medicare Tax Payable.......................................... 1,763
Employees Federal Income Tax Payable ........... 10,873
Cash................................................................. 19,483
2 Bond Deductions Payable................................... 2,520
Cash................................................................. 2,520
12 Sales Salaries Expense ....................................... 35,300
Officers Salaries Expense ................................... 17,000
Office Salaries Expense ...................................... 6,300
Social Security Tax Payable .......................... 3,516
Medicare Tax Payable..................................... 879
Employees Federal Income Tax Payable...... 10,431
Employees State Income Tax Payable.......... 2,637
Bond Deductions Payable.............................. 1,260
Medical Insurance Payable ............................ 467
Salaries Payable ............................................. 39,410
12 Salaries Payable................................................... 39,703
Cash................................................................. 39,703
12 Payroll Tax Expense ............................................ 4,845
Social Security Tax Payable .......................... 3,516
Medicare Tax Payable..................................... 879
State Unemployment Tax Payable................. 350
Federal Unemployment Tax Payable............. 100
15 Social Security Tax Payable................................ 7,032
Medicare Tax Payable.......................................... 1,758
Employees Federal Income Tax Payable ........... 10,431
Cash................................................................. 19,221
Dec. 26 Sales Salaries Expense ....................................... 35,400
Officers Salaries Expense ................................... 17,250
Office Salaries Expense ...................................... 6,400
Social Security Tax Payable .......................... 3,543
Medicare Tax Payable..................................... 886
Employees Federal Income Tax Payable...... 10,511
Employees State Income Tax Payable.......... 2,657
Bond Deductions Payable.............................. 1,260
Salaries Payable ............................................. 40,193
26 Salaries Payable................................................... 40,193
Cash................................................................. 40,193
26 Payroll Tax Expense ............................................ 4,644
Social Security Tax Payable .......................... 3,543
Medicare Tax Payable..................................... 886
State Unemployment Tax Payable................. 170
Federal Unemployment Tax Payable............. 45
30 Employees State Income Tax Payable ............... 15,168
Cash................................................................. 15,168
30 Bond Deductions Payable................................... 2,520
Cash................................................................. 2,520
31 Pension Expense ................................................. 72,800
Cash................................................................. 61,600
Unfunded Pension Liability............................ 11,200
To record pension cost and unfunded
liability.
2.
Dec. 31 Sales Salaries Expense ....................................... 10,620
Officers Salaries Expense ................................... 5,175
Office Salaries Expense ...................................... 1,920
Salaries Payable ............................................. 17,715
Accrued wages for the period.
31 Vacation Pay Expense ......................................... 14,840
Vacation Pay Payable..................................... 14,840
Vacation pay accrued for the period.
111 Salaries Payable — 118 Bond Deductions Payable $ 2,520
112 Social Security Tax Payable $ 6,847 119 Medical Insurance Payable 2,800
113 Medicare Tax Payable 1,763 411 Sales Salaries Expense 778,000
114 Employees Federal Income Tax Payable 10,873 511 Offi cers Salaries Expense 375,000
115 Employees State Income Tax Payable 9,874 611 Offi ce Salaries Expense 140,000
116 State Unemployment Tax Payable 1,400 618 Payroll Tax Expense 104,610
117 Federal Unemployment Tax Payable 400
The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December:
Dec. 1. Issued Check No. 615 to Canal Insurance Company for $2,800, in payment of the semiannual premium on the group medical insurance policy.
1. Issued Check No. 616 to Green Bank for $19,483, in payment for $6,847 of social security tax, $1,763 of Medicare tax, and $10,873 of employees’ federal income tax due.
2. Issued Check No. 617 for $2,520 to Green Bank to purchase U.S. savings bonds for employees.
12. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:
Salary distribution:
Sales $35,300
Offi cers 17,000
Offi ce 6,300 $58,600
Deductions:
Social security tax $ 3,516
Medicare tax 879
Federal income tax withheld 10,431
State income tax withheld 2,637
Savings bond deductions 1,260
Medical insurance deductions 467 19,190
Net amount $39,410
12. Issued Check No. 622 in payment of the net amount of the biweekly payroll.
12. Journalized the entry to record payroll taxes on employees’ earnings of December 12: social security tax, $3,516; Medicare tax, $879; state unemployment tax, $350; federal unemployment tax, $100.
15. Issued Check No. 630 to Green Bank for $18,635, in payment for $7,032 of social security tax, $1,758 of Medicare tax, and $10,431 of employees’ federal income tax due.
Dec. 26. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:
Salary distribution:
Sales $35,400
Offi cers 17,250
Offi ce 6,400 $59,050
Deductions:
Social security tax $ 3,543
Medicare tax 886
Federal income tax withheld 10,511
State income tax withheld 2,657
Savings bond deductions 1,260 18,857
Net amount $40,193
26. Issued Check No. 640 for the net amount of the biweekly payroll.
26. Journalized the entry to record payroll taxes on employees’ earnings of December 26: social security tax, $3,543; Medicare tax, $886; state unemployment tax, $170; federal unemployment tax, $45.
30. Issued Check No. 651 for $15,168 to State Department of Revenue, in payment of employees’ state income tax due on December 31.
30. Issued Check No. 652 to Green Bank for $2,520 to purchase U.S. savings bonds for employees.
31. Paid $61,600 to the employee pension plan. The annual pension cost is $72,800. (Record both the payment and the unfunded pension liability.)
Instructions
1. Journalize the transactions.
2. Journalize the following adjusting entries on December 31:
a. Salaries accrued: sales salaries, $10,620; officers salaries, $5,175; office salaries, $1,920. The payroll taxes are immaterial and are not accrued.
b. Vacation pay, $14,840.
Answer:
1.
Dec. 1 Medical Insurance Payable.................................. 2,800
Cash................................................................. 2,800
1 Social Security Tax Payable................................ 6,847
Medicare Tax Payable.......................................... 1,763
Employees Federal Income Tax Payable ........... 10,873
Cash................................................................. 19,483
2 Bond Deductions Payable................................... 2,520
Cash................................................................. 2,520
12 Sales Salaries Expense ....................................... 35,300
Officers Salaries Expense ................................... 17,000
Office Salaries Expense ...................................... 6,300
Social Security Tax Payable .......................... 3,516
Medicare Tax Payable..................................... 879
Employees Federal Income Tax Payable...... 10,431
Employees State Income Tax Payable.......... 2,637
Bond Deductions Payable.............................. 1,260
Medical Insurance Payable ............................ 467
Salaries Payable ............................................. 39,410
12 Salaries Payable................................................... 39,703
Cash................................................................. 39,703
12 Payroll Tax Expense ............................................ 4,845
Social Security Tax Payable .......................... 3,516
Medicare Tax Payable..................................... 879
State Unemployment Tax Payable................. 350
Federal Unemployment Tax Payable............. 100
15 Social Security Tax Payable................................ 7,032
Medicare Tax Payable.......................................... 1,758
Employees Federal Income Tax Payable ........... 10,431
Cash................................................................. 19,221
Dec. 26 Sales Salaries Expense ....................................... 35,400
Officers Salaries Expense ................................... 17,250
Office Salaries Expense ...................................... 6,400
Social Security Tax Payable .......................... 3,543
Medicare Tax Payable..................................... 886
Employees Federal Income Tax Payable...... 10,511
Employees State Income Tax Payable.......... 2,657
Bond Deductions Payable.............................. 1,260
Salaries Payable ............................................. 40,193
26 Salaries Payable................................................... 40,193
Cash................................................................. 40,193
26 Payroll Tax Expense ............................................ 4,644
Social Security Tax Payable .......................... 3,543
Medicare Tax Payable..................................... 886
State Unemployment Tax Payable................. 170
Federal Unemployment Tax Payable............. 45
30 Employees State Income Tax Payable ............... 15,168
Cash................................................................. 15,168
30 Bond Deductions Payable................................... 2,520
Cash................................................................. 2,520
31 Pension Expense ................................................. 72,800
Cash................................................................. 61,600
Unfunded Pension Liability............................ 11,200
To record pension cost and unfunded
liability.
2.
Dec. 31 Sales Salaries Expense ....................................... 10,620
Officers Salaries Expense ................................... 5,175
Office Salaries Expense ...................................... 1,920
Salaries Payable ............................................. 17,715
Accrued wages for the period.
31 Vacation Pay Expense ......................................... 14,840
Vacation Pay Payable..................................... 14,840
Vacation pay accrued for the period.
