Question

Assume that the social security tax rate is 6% and the Medicare tax rate is 1.5%. In the following summary of data for a payroll period, some amounts have been intentionally omitted:

Earnings:
1. At regular rate	?
2. At overtime rate	$60,000
3. Total earnings	?
Deductions:
4. Social security tax	31,200
5. Medicare tax	7,800
6. Federal income tax withheld	130,000
7. Medical insurance	18,200
8. Union dues	?
9. Total deductions	194,700
10. Net amount paid	325,300
Accounts debited:
11. Factory Wages	275,000
12. Sales Salaries	?
13. Office Salaries	115,000

Required:

a.	Determine the amounts omitted in lines (1), (3), (8), and (12).
b.	On December 19, journalize the entry to record the payroll accrual.*
c.	On December 20, journalize the entry to record the payment of the payroll.* *Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

Chart of Accounts

CHART OF ACCOUNTS
General Ledger
ASSETS 110 Cash 111 Accounts Receivable 112 Interest Receivable 113 Notes Receivable 115 Merchandise Inventory 116 Supplies 118 Prepaid Insurance 120 Land 123 Building 124 Accumulated Depreciation-Building 125 Office Equipment 126 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 213 Interest Payable 214 Notes Payable 215 Salaries Payable 216 Social Security Tax Payable 217 Medicare Tax Payable 218 Employees Federal Income Tax Payable 221 Medical Insurance Payable 222 Union Dues Payable 224 Federal Unemployment Tax Payable 225 State Unemployment Tax Payable 226 Vacation Pay Payable 227 Unfunded Pension Liability 228 Product Warranty Payable 229 EPA Fines Payable 230 Litigation Claims Payable EQUITY 310 Owner, Capital 311 Owner, Drawing	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 520 Factory Wages Expense 521 Sales Salaries Expense 522 Office Salaries Expense 524 Depreciation Expense-Building 525 Delivery Expense 526 Repairs Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense-Office Equipment 533 Insurance Expense 534 Supplies Expense 535 Payroll Tax Expense 536 Vacation Pay Expense 537 Pension Expense 538 Cash Short and Over 539 Product Warranty Expense 540 Damage Awards and Fines 541 Miscellaneous Expense 710 Interest Expense

First Question

a. Determine the amounts omitted in lines (1), (3), (8), and (12).

(1)
(3)
(8)
(12)

Journal

b.	On December 19, journalize the entry to record the payroll accrual.*
c.	On December 20, journalize the entry to record the payment of the payroll.*
	*Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

Answer 1

a.     Summary: (1) $460,000; (3) $520,000; (8) $7,500; (12) $130,000

                 Net amount paid................................................................                                  $325,300

                 Total deductions................................................................                                     194,700

        (3)     Total earnings....................................................................                                  $520,000

                 Overtime............................................................................                                  60,000

        (1)     Regular..............................................................................                                  $460,000

                 Total deductions................................................................                                  $194,700

                 Social security tax.............................................................         $    31,200

                 Medicare tax......................................................................              7,800

                 Income tax withheld.........................................................            130,000

                 Medical insurance..............................................................               18,200            187,200

        (8)     Union dues........................................................................                                 $    7,500

                 Total earnings....................................................................                                  $520,000

                 Factory wages...................................................................          $275,000

                 Office salaries....................................................................          115,000         390,000

        (12)   Sales salaries......................................................................                                  $130,000

b.     Factory Wages Expense............................................................. 275,000

        Sales Salaries Expense................................................................ 130,000

        Office Salaries Expense............................................................. 115,000

              Social Security Tax Payable.................................................                                      31,200

              Medicare Tax Payable..........................................................                                      7,800

              Employees Income Tax Payable...........................................                                    130,000

              Medical Insurance Payable...................................................                                      18,200

              Union Dues Payable.............................................................                                      7,500

              Salaries Payable....................................................................                                    325,300

c.     Salaries Payable..........................................................................            325,300

              Cash......................................................................................                                    325,300