Question

Entries for Payroll and Payroll Taxes

The following information about the payroll for the week ended December 30 was obtained from the records of Saine Co.:

Salaries:				Deductions:
	Sales salaries	$223,000			Income tax withheld	$80,960
	Warehouse salaries	123,000			Social security tax withheld	27,600
	Office salaries	114,000			Medicare tax withheld	6,900
		$460,000			Retirement savings	10,120
					Group insurance	8,280
						$133,860

Tax rates assumed:
	Social security, 6%
	Medicare, 1.5%
	State unemployment (employer only), 5.4%
	Federal unemployment (employer only), 0.6%

Required:

If an amount box does not require an entry, leave it blank.

1a. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the entry on December 30 to record the payroll.

1b. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the entry on December 30 to record the employer's payroll taxes on the payroll to be paid on December 31. Of the total payroll for the last week of the year, $23,000 is subject to unemployment compensation taxes.

2a. Assuming that the payroll for the last week of the year is to be paid on January 4 of the following fiscal year, journalize the entry on December 30 to record the payroll.

2b. Assuming that the payroll for the last week of the year is to be paid on January 4 of the following fiscal year, journalize the entry to record the employer's payroll taxes on the payroll to be paid on January 4. Because it is a new fiscal year, all $460,000 in salaries is subject to unemployment compensation taxes.

Answer 1

Solution-

1a.

Date	Account Title and Explanation	Debit ($)	Credit ($)
Dec 30	Sales Salaries Expense	223000
	Warehouse Salaries Expense	123000
	Office Salaries Expense	114000
	To Employee Income Tax Payable		80960
	To Social Security Tax Payable		27600
	To Medicare Tax Payable		6900
	To Retirement Savings Payable		10120
	To Group Insurance Payable		8280
	To Salaries Payable [$460000 - $133860]		326140
	[Record, payroll expenses]

1b.

Date	Account Title and Explanation	Debit ($)	Credit ($)
Dec 30	Payroll Tax Expense	35880
	To Social Security Tax Payable [$460000*6%]		27600
	To Medicare Tax Payable [$460000*1.5%]		6900
	To State Unemployment Tax Payable [$23000*5.4%]		1242
	To Federal Unemployment Tax Payable [$23000*0.6%]		138
	[Record, employer's payroll taxes]

2a.

Date	Account Title and Explanation	Debit ($)	Credit ($)
Dec 30	Sales Salaries Expense	223000
	Warehouse Salaries Expense	123000
	Office Salaries Expense	114000
	To Employee Income Tax Payable		80960
	To Social Security Tax Payable		27600
	To Medicare Tax Payable		6900
	To Retirement Savings Payable		10120
	To Group Insurance Payable		8280
	To Salaries Payable [$460000 - $133860]		326140
	[Record, payroll expenses]

2b.

Date	Account Title and Explanation	Debit ($)	Credit ($)
Jan 4	Payroll Tax Expense	62100
	To Social Security Tax Payable		27600
	To Medicare Tax Payable		6900
	To State Unemployment Tax Payable [$460000*5.4%]		24840
	To Federal Unemployment Tax Pyable [$460000*0.6%]		2760
	[Record, employer's payroll taxes]