Question

Problem 25-4: Prepare payroll entries.

Prepare entries for the Volk Company in general journal form for each of the following transactions. The company has five employees, earning $2,000 each per month, for total salaries of $10,000 per month.

January 1         The company paid a $300 premium for workers' (workmen's) compensation insurance for January.

January 31        The company recorded the payroll for the month of January. Gross wages were $10,000, the FICA OASDI tax deduction was $620, the FICA HI tax deduction was $145, federal income tax withheld (FIT) was $2,000.

January 31        The company recorded the payment of the January payroll.

January 31        The company recorded the employer’s payroll tax expense for January.

February 1        The company paid a $300 premium for workers' (workmen's) compensation insurance for February.

February 28      The company recorded the payroll for the month of February. Gross wages were $10,000, the FICA OASDI tax deduction was $620, the FICA HI tax deduction was $145, federal income tax withheld (FIT) was $2,000.

February 28      The company recorded the payment of the February payroll.

February 28      The company recorded the employer’s payroll tax expense for February.

March 1            The company paid a $300 premium for workers' (workmen's) compensation insurance for March.

March 31          The company recorded the payroll for the month of March. Gross wages were $10,000, the FICA OASDI tax deduction was $620, the FICA HI tax deduction was $145, federal income tax withheld (FIT) was $2,000.

March 31          The company recorded the payment of the March payroll.

March 31          The company recorded the employer’s payroll tax expense for March.

After posting these entries for January through March, on March 31, at the end of the first quarter, the balances of the following accounts were:

• $3,720 for FICA OASDI tax (employee and employer shares)

• $870 for FICA HI tax (employee and employer shares)

• $6,000 for employees’ FIT

• $1,620 for SUTA tax

• $180 for FUTA tax

                  April 10             The company deposited the FICA and FIT taxes owed for the first quarter in an authorized commercial bank with Form 501

April 12             The company paid the first quarter SUTA taxes with the state form.

April 15             The company deposited the first quarter FUTA taxes in an authorized commercial bank with Form 508.

GENERAL JOURNAL Page 1
DATE		ACCOUNTS AND EXPLANATION	REF.	DEBIT	CREDIT
Jan.	1
		Paid worker’s compensation for January
	31
		Recorded payroll for January
	31
		Paid payroll for January
	31
		Recorded employer’s payroll tax expense for January
Feb.	1
		Paid worker’s compensation for February
	28
		Recorded payroll for February
	28
		Paid payroll for February

Answer 1

DATE	ACCOUNTS AND EXPLANATION	DEBIT	CREDIT
1-Jan	Workmen Compensation Insurance expenses	$300
	Cash		$300
	Paid worker’s compensation for January
31-Jan	Wages expenses	$10,000
	FICA OASDI tax payable		$620
	FICA HI tax payable		145
	Federal Income tax payable		2000
	Wages payable		$7,235
	Recorded payroll for January
31-Jan	Wages payable	$7,235
	Cash		$7,235
	Paid payroll for January
31-Jan	Payroll Tax expenses	$1,365
	FICA OASDI tax payable		$620
	FICA HI tax payable		$145
	State Unemployment taxes payable (10000*5.4%)		540
	Federal Unemployment taxes payable (10000*.6%)		60
	Recorded employer’s payroll tax expense for January
1-Feb	Workmen Compensation Insurance expenses	$300
	Cash		$300
	Paid worker’s compensation for February
28-Feb	Wages expenses	$10,000
	FICA OASDI tax payable		$620
	FICA HI tax payable		145
	Federal Income tax payable		2000
	Wages payable		$7,235
	Recorded payroll for February
28-Feb	Wages payable	$7,235
	Cash		$7,235
	Paid payroll for January
28-Feb	Payroll Tax expenses	$1,365
	FICA OASDI tax payable		$620
	FICA HI tax payable		$145
	State Unemployment taxes payable (10000*5.4%)		540
	Federal Unemployment taxes payable (10000*.6%)		60
	Recorded employer’s payroll tax expense for January
1-Mar	Workmen Compensation Insurance expenses	$300
	Cash		$300
	Paid worker’s compensation for March
31-Mar	Wages expenses	$10,000
	FICA OASDI tax payable		$620
	FICA HI tax payable		145
	Federal Income tax payable		2000
	Wages payable		$7,235
	Recorded payroll for March
31-Mar	Wages payable	$7,235
	Cash		$7,235
	Paid payroll for March
31-Mar	Payroll Tax expenses	$1,365
	FICA OASDI tax payable		$620
	FICA HI tax payable		$145
	State Unemployment taxes payable (10000*5.4%)		540
	Federal Unemployment taxes payable (10000*.6%)		60
	Recorded employer’s payroll tax expense for March
10-Apr	FICA OASDI tax payable	$3,720
	FICA HI tax payable	$870
	Federal Income tax payable	6000
	Cash		$10,590
12-Apr	State Unemployment taxes payable	$1,620
	Cash		$1,620
15-Apr	Federal Unemployment taxes payable	180
	Cash		$180