Question

In: Accounting

Accrued Payroll and Payroll TaxesJoey Department Store’s employees are paid on the 6th and 22nd...

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.

Solutions

Expert Solution

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)

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