Question

Urban Window Company had gross wages of $350,000 during the week ended July 15. The amount of wages subject to social security tax was $350,000, while the amount of wages subject to federal and state unemployment taxes was $60,000. Tax rates are as follows:

Social security	6.0%
Medicare	1.5%
State unemployment	5.4%
Federal unemployment	0.6%

The total amount withheld from employee wages for federal taxes was $43,500.

	Required:
A.	Journalize the entry to record the payroll for the week of July 15.*
B.	Journalize the entry to record the payroll tax expense incurred for the week of July 15.* * Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTS Urban Window Company General Ledger ASSETS 110 Cash 111 Accounts Receivable 112 Interest Receivable 113 Notes Receivable 115 Merchandise Inventory 116 Supplies 118 Prepaid Insurance 120 Land 123 Building 124 Accumulated Depreciation-Building 125 Office Equipment 126 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 213 Interest Payable 214 Notes Payable 215 Wages Payable 216 Social Security Tax Payable 217 Medicare Tax Payable 218 Employees Federal Income Tax Payable 219 Employees State Income Tax Payable 221 Retirement Savings Deductions Payable 224 Federal Unemployment Tax Payable 225 State Unemployment Tax Payable 226 Vacation Pay Payable 227 Unfunded Pension Liability 228 Product Warranty Payable EQUITY 310 Owner, Capital 311 Owner, Drawing 312 Income Summary A. Journalize the entry to record the payroll for the week of July 15.* B. Journalize the entry to record the payroll tax expense incurred for the week of July 15.* * Refer to the Chart of Accounts for exact wording of account titles. PAGE 11 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5 6 7 8 9 10 Solution DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5 6 7 8 9 10 REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 520 Wages Expense 524 Depreciation Expense-Building 525 Delivery Expense 526 Repairs Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense-Office Equipment 533 Insurance Expense 534 Supplies Expense 535 Payroll Tax Expense 536 Vacation Pay Expense 537 Pension Expense 538 Cash Short and Over 539 Product Warranty Expense 540 Miscellaneous Expense 710 Interest Expense

Answer 1

Date	Description	Post ref	Debit	Credit	Assets	Liabilities	Equity
July 15	Wages Expense		350000				↓
	Social Security Tax Payable			21000		↑
	Medicare Tax Payable			5250		↑
	Employees Federal Income Tax Payable			43500		↑
	Wages Payable			280250		↑
B
July 15	Payroll Tax Expense		29850				↓
	Social Security Tax Payable			21000		↑
	Medicare Tax Payable			5250		↑
	Federal Unemployment Tax Payable			360		↑
	State Unemployment Tax Payable			3240		↑
	Workings:
	Social Security Tax Payable=350000*6%=21000
	Medicare Tax Payable = 350000*1.5%=5250
	Federal Unemployment Tax Payable=60000*0.6%=360
	State Unemployment Tax Payable=60000*5.4%=3240