In: Accounting
Accrued Payroll and Payroll Taxes
Joey Department Store’s employees are paid on the 6th and 22nd of each month for the period ending the last day of the previous month and the 15th of the current month, respectively. An analysis of the payroll on Monday, October 6, 2015, revealed the following data.
Gross Pay | FICA | Federal Income Tax | State Income Tax | Net Insurance | Pay | |
Office staff salaries | $15,450 | $ 810 | $ 2,400 | $ 450 | $ 410 | $11,380 |
Officer salaries | 31,000 | 286 | 6,300 | 1,000 | 500 | 22,914 |
Sales salaries | 20,000 | 834 | 4,200 | 690 | 480 | 13,796 |
Totals | $66,450 | $1,930 | $12,900 | $2,140 | $1,390 | $48,090 |
It is determined that for the September 30 pay period, no additional employees exceeded the wage base for FICA purposes than had done so in prior pay periods. All of the officer salaries, 75% of the office staff salaries, and 40% of the sales salaries for the payroll period ending September 30 were paid to employees who had exceeded the wage base for unemployment taxes. Assume the unemployment tax rates in force are as follows: federal unemployment tax, 0.8%, and state unemployment tax, 5.4%.
Instructions: Prepare the adjusting entries that would be required at September 30, the end of Joey’s fiscal year, to reflect the accrual of the payroll and any related payroll taxes. Separate salaries and payroll tax expense accounts are used for each of the three employee categories: office staff, officer, and sales.
Date | Accounts Title | Dr | Cr |
30-Sep | Office staff salaries expenses | $15,450 | |
Officer salaries expenses | 31,000 | ||
Sales salaries expenses | $20,000 | ||
FICA taxes payable | $1,930 | ||
Federal Income taxes payable | 12900 | ||
State Income Tax payable | 2140 | ||
Insurance premium payable | 1390 | ||
Salaries & Wages payable | $48,090 | ||
30-Sep | Payroll Tax expenses | $5,917.00 | |
FICA taxes payable | $1,930 | ||
Federal unemployment taxes payable | 398.70 | ||
State unemployment taxes payable | 3588.30 | ||
(being payroll tax expenses recorded) | |||
6-Oct | Salaries & Wages payable | 36967.40 | |
Cash | 36967.40 | ||
22914+(11380*.75)+(13796*.4) | |||
(being payroll paid recorded) | |||
If totally seprate accounts are used | |||
30-Sep | Office staff salaries expenses | $15,450 | |
Officer salaries expenses | 31,000 | ||
Sales salaries expenses | $20,000 | ||
FICA taxes payable | $1,930 | ||
Federal Income taxes payable | 12900 | ||
State Income Tax payable | 2140 | ||
Insurance premium payable | 1390 | ||
Office staff salaries payable | $11,380 | ||
Officer salaries payable | 22914 | ||
Sales salaries payable | 13796 | ||
30-Sep | Payroll Tax expenses | $5,917.00 | |
FICA taxes payable | $1,930 | ||
Federal unemployment taxes payable | 398.70 | ||
State unemployment taxes payable | 3588.30 | ||
(being payroll tax expenses recorded) | |||
6-Oct | Office staff salaries payable | 8535.00 | |
Officer salaries payable | 22914.00 | ||
Sales salaries payable | 5518.40 | ||
Cash | 36967.40 | ||
(being payroll paid recorded) | |||