Question

The payroll of Bramble Corp. for September 2020 is as follows. Total payroll was $540,000. Pensionable (CPP) and insurable (EI) earnings were $380,000. Income taxes in the amount of $83,000 were withheld, as were $7,408 in union dues. The Employment Insurance tax rate was 1.66% for employees and 2.324% for employers, and the CPP rate was 4.95% for employees and 4.95% for employers.

QUESTIONS:

A) Prepare the necessary journal entries to record the payroll if the salaries and wages paid and the employer payroll taxes are recorded separately.

Account Titles and explanation	Debit	Credit

(To record the salaries and wages paid and the employee payroll deductions)

Account Titles and explanation	Debit	Credit

(To record employer contributions)

B) Prepare the entries to record the payment of all required amounts to the Receiver General for Canada and to the employees’ union.

Account Titles and explanation	Debit	Credit

(To record remittance)

Account Titles and explanation	Debit	Credit

(To remit union dues collected)

C) For every dollar of salaries and wages that Bramble commits to pay, what is the actual payroll cost to the company?

Cost per dollar

$___

Answer 1

A) Prepare the necessary journal entries to record the payroll if the salaries and wages paid and the employer payroll taxes are recorded separately.
Account Titles and explanation	Debit	Credit
Salaries and Wages Expense	$ 540,000.00
Employee Income Tax Dedutions Payable		$   83,000.00
EI premiums payable ($380,000 X 1.66%)		$     6,308.00
CPP premiums payable ($380,000 x 4.95%)		$   18,810.00
Union dues payable		$     7,408.00
Cash		$ 424,474.00
(To record the salaries and wages paid and the employee payroll deductions)
Account Titles and explanation	Debit	Credit
Payroll Tax Expense	$   27,641.20
EI premiums payable ($380,000 X 2.324%)		$     8,831.20
CPP premiums payable ($380,000 x 4.95%)		$   18,810.00
(To record employer contributions)
B) Prepare the entries to record the payment of all required amounts to the Receiver General for Canada and to the employees’ union.
Account Titles and explanation	Debit	Credit
Employee Income Tax Deductions Payable	$   83,000.00
EI premiums payable (6308 + 8831)	$   15,139.20
CPP premiums payable (18,810 + 18,810)	$   37,620.00
Cash		$ 135,759.20
(To record remittance)
Account Titles and explanation	Debit	Credit
Union Dues Payable	$     7,408.00
Cash		$     7,408.00
(To remit union dues collected)
C) For every dollar of salaries and wages that Bramble commits to pay, what is the actual payroll cost to the company?
Cost per dollar		$___
Salaries and wages for September 2020	$ 540,000.00
Payroll Tax Expense	$   27,641.20
Total payroll cost for September 2020	$ 567,641.20
Cost per dollar of salaries and wages = (567,641.20/$540,000	1.051