Question

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 $66,000 3. Total earnings ? Deductions: 4. Social security tax 29,160 5. Medicare tax 7,290 6. Income tax withheld 134,000 7. Medical insurance 17,010 8. Union dues ? 9. Total deductions 194,210 10. Net amount paid 291,790 Accounts debited: 11. Factory Wages 260,000 12. Sales Salaries ? 13. Office Salaries 120,000 Required: A. Calculate the amounts omitted in lines (1), (3), (8), and (12). Assume that the social security tax rate was 6.0% and the Medicare tax rate was 1.5%. B. Journalize the entry to record the payroll accrual.* C. Journalize the entry to record the payment of the payroll.* * Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

a
(1)	420000
(3)	486000
(8)	6750
(12)	106000
b
	Debit	Credit
Factory wages expense	260000
Sales salaries expense	106000
Office Salaries expense	120000
Social security tax payable		29160
Medicare tax payable		7290
Employees income tax payable		134000
Medical insurance payable		17010
Union dues payable		6750
Salaries payable		291790
c
Salaries payable	291790
Cash		291790
Workings:
Net amount paid	291790
Add: Total deductions	194210
Total earnings	486000
Total earnings	486000
Less: At overtime rate	66000
At regular rate	420000
Total deductions	194210
Less:
Social security tax	29160
Medicare tax	7290
Income tax withheld	134000
Medical insurance	17010
= Union dues	6750
Total earnings	486000
Less:
Factory Wages	260000
Office Salaries	120000
= Sales Salaries	106000