In: Accounting
Pina Company pays its office employee payroll weekly. Below is a
partial list of employees and their payroll data for August.
Because August is their vacation period, vacation pay is also
listed.
|
Earnings to |
Weekly |
Vacation Pay to Be |
||||||
Mark Hamill | $5,200 | $240 | - | ||||||
Karen Robbins | 4,500 | 190 | $380 | ||||||
Brent Kirk | 3,700 | 150 | 300 | ||||||
Alec Guinness | 8,400 | 290 | - | ||||||
Ken Sprouse | 9,000 | 370 | 740 |
Assume that the federal income tax withheld is 10% of wages. Union
dues withheld are 2% of wages. Vacations are taken the second and
third weeks of August by Robbins, Kirk, and Sprouse. The state
unemployment tax rate is 2.5% and the federal is 0.8%, both on a
$7,000 maximum. The FICA rate is 7.65% on employee and employer on
a maximum of $128,400 per employee. In addition, a 1.45% rate is
charged both employer and employee for an employee’s wages in
excess of $128,400.
Make the journal entries necessary for each of the four August
payrolls. The entries for the payroll and for the company’s
liability are made separately. Also make the entry to record the
monthly payment of accrued payroll liabilities.
Solution:
Journal entry:
Payroll 1 | |||
Date | Particulars | Amount ($) | Amount ($) |
Wages and salaries Expense ($240+$190+$150+$290+$370) | $1,240 | ||
Withholding taxes payable (1,240*10%) | $124 | ||
Union Dues payable (1,20*2%) | $24.8 | ||
FICA taxes Payable (1,240*7.65%) | $94.86 | ||
cash | $996.34 | ||
(For wages and salaries exp paid) | |||
Payroll tax Expense | 114.01 | ||
FICA taxes Payable (1,240*7.65%) | $94.86 | ||
Federal unemployment tax payable (240+190+150)*0.8% | $4.65 | ||
State Unemployment tax Payable (240+190+150)*2.5% | $14.5 | ||
(For Payroll tax exp recorded) | |||
Payroll 2 and 3 | |||
Date | Particulars | Amount ($) | Amount ($) |
Vacation wages payable ($380+$300+$740)/2 | $710 | ||
Wages and salaries Expense (240+290) | $530 | ||
Withholding taxes payable (1,240*10%) | $124 | ||
Union Dues payable (1,240*2%) | $24.8 | ||
FICA taxes Payable (1,240*7.65%) | $94.86 | ||
cash | $996.34 | ||
(For wages and salaries exp paid) | |||
Payroll tax Expense | 114.01 | ||
FICA taxes Payable (1,240*7.65%) | $94.86 | ||
Federal unemployment tax payable (240+190+150)*0.8% | $4.65 | ||
State Unemployment tax Payable (240+190+150)*2.5% | $14.5 | ||
(For Payroll tax exp recorded) | |||
Payroll 4 | |||
Date | Particulars | Amount ($) | Amount ($) |
Wages and salaries Expense ($240+$190+$150+$290+$370) | $1,240 | ||
Withholding taxes payable (1,240*10%) | $124 | ||
Union Dues payable (1,20*2%) | $24.8 | ||
FICA taxes Payable (1,240*7.65%) | $94.86 | ||
cash | $996.34 | ||
(For wages and salaries exp paid) | |||
Payroll tax Expense | 114.01 | ||
FICA taxes Payable (1,240*7.65%) | $94.86 | ||
Federal unemployment tax payable (240+190+150)*0.8% | $4.65 | ||
State Unemployment tax Payable (240+190+150)*2.5% | $14.5 | ||
(For Payroll tax exp recorded) | |||
Monthly payment of accrued Payroll liabilities | |||
Withholding taxes payable (124*4) | $496 | ||
Union Dues payable (24.8*4) | $99.2 | ||
FICA taxes Payable (94.86*8) | $758.88 | ||
Federal unemployment tax payable (4.65*4) | $18.6 | ||
State Unemployment tax Payable (14.5*4) | $58 | ||
Cash | $1,430.68 | ||
(For accrued payroll liabilities paid) |
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