1. The payroll of Burton Inc. for March 2018 is as follows. Total payroll was $485,000....

1. The payroll of Burton Inc. for March 2018 is as follows. Total payroll was $485,000. Pensionable (CPP) and insurable (EI) earnings were $365,000. Income taxes in the amount of $85,000 were withheld, as were $8,000 in union dues. The EI tax rate was 1.88% for employees and 2.632% for employers, and the CPP rate was 4.95% for employees and 4.95% for employers.

(a) Prepare the necessary journal entries to record the payroll if the salaries and wages paid and the employer payroll taxes are recorded separately. [2 Marks]

(b) Prepare the entries to record the payment of all required amounts to the Receiver General. [2 Marks]

Solutions

Expert Solution

Employee Benefit costs
Particulars	Debit	Credit
Salaries expenses	485,000.00
Emploment insurance tax payable (365,000*1.88%)		6,862.00
Employees income tax payable		85,000.00
CPP tax payable (365,000*4.95%)		18,067.50
Employee's union due payable		8,000.00
Salary payable		367,070.50
(To record payroll & payroll deduction)

Employer Contributions To CPP &EI
Payroll taxes expenses	27,674.30
Employment insurance tax payable (365,000*2.632%)		9,606.80
CPP Tax payable (365,000*4.95%)		18,067.50
(To record employer's payroll taxes)

Employment insurance taxes payable (6,862+9,606.8)	16,468.80
Employee income tax payable	85,000.00
CPP taxes payable	36,135.00
Employee union due payable	8,000.00
Cash		1,45,603.8
(To record the payment of all required amt to the receiver general & employee union)

Salaries & wages that flounder commits to pay (A)	485,000.00
actual payroll cost to the company (include employer share) (485,000 + 27,674.3) (B)	512,674.30
Ratio (A/B)	1.06

Note: Amounts are rounded off to 2 decimals

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