Question

JOurnalize

Purchased 5 racing suits from Sparcoal $5,300 ($1,060 each), terms 2/10, n/60, for resale purposes, on account, plus total shipping costs of $25.00.
HPR withholds taxes from its employees' wages and salaries, accrual and payment of a $6,000 (gross) payroll included the following:
Social Security (FICA) Tax (Use 6.2% of gross wages)
Federal Taxes	$1,200
Medicare Taxes (Use 1.45% of gross wages)
State Taxes (Use $2.7% of gross wages
City Taxes   (Use 2% of gross wages)
Combine the employee taxes withheld activities into one account, Employee Taxes Withheld Payable.
Accrue employer tax, $459 (related to August 18th payroll).   These taxes include employer portion of FICA and Medicare tax and state and Federal unemployment tax. Use Employer Tax Payable account for the total employer payroll taxes.
Paid Sparcoal for August 10 in full.
Sold 7 racing suits to Indy Mania Racing Team on account for $2,100 each. HPR uses a perpetual inventory system for its merchandise inventory sales and determines costs using first in-first out costing method. Include your supporting calculations in the "Supporting Assumptions and Calculations" schedule.

Answer 1

	Accounts Title	Dr	Cr
1	Mercandise inventory (5300+25)	$5,325
	Accounts payable		$5,325
	(being inventory purchased on credit)
2	Wages and salaries expenses	$6,000
	Employee Taxes Withheld Payable		$1,854.55
	Wages and salaries payable		$4,145.45
	working	Salary S	% of tax T	Tax payable (S*T)
	Social Security (FICA) Tax (Use 6.2% of gross wages)	$5,300	6.20%	$328.60
	Federal Taxes			$1,200
	Medicare Taxes (Use 1.45% of gross wages)	$5,300	1.45%	$76.85
	State Taxes (Use $2.7% of gross wages	$5,300	2.70%	$143.10
	City Taxes   (Use 2% of gross wages)	$5,300	2%	$106.00
				$1,854.55
3	payroll taxes expenses	$459
	Employer Tax payable		$459
4	Accounts payable	$5,300
	Cash		$5,300
5	Accounts Receivable (2100*7)	$14,700
	Sales		$14,700
	Cost of good sold
	Mercandse inventory
	(as the previous inventory information not provided hence the amt cannoy be calculated)
	We have to use FIFO method so from inventory purchased from sparcoal before that
	we need to take mercandise inventory and than from sparcoal purchases)
If any doubt please comment