Question

The following information about the payroll for the week ended December 30 was obtained from the records of Pharrell Co.: Salaries: Sales salaries $330,000 Warehouse salaries 184,000 Office salaries 146,000 $660,000 Deductions: Income tax withheld $117,200 Social security tax withheld 39,600 Medicare tax withheld 9,900 Retirement savings 14,520 Group insurance 11,880 $193,100 Tax rates assumed: Social security 6% Medicare 1.5% State unemployment (employer only) 5.4% Federal unemployment (employer only) 0.6% Required: 1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries (refer to the Chart of Accounts for exact wording of account titles): A. December 30, to record the payroll. B. 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, $33,000 is subject to unemployment compensation taxes. 2. Assuming that the payroll for the last week of the year is to be paid on January 5 of the following fiscal year, journalize the following entries (refer to the Chart of Accounts for exact wording of account titles): A. On page 11 of the journal: December 30, to record the payroll. B. On page 12 of the journal: January 5, to record the employer’s payroll taxes on the payroll to be paid on January 5. Because it is a new fiscal year, all salaries are subject to unemployment compensation taxes.

Answer 1

1
a	Account Title and explanation	Debit	Credit
	Sales salaries	$330,000
	Warehouse salaries	184,000
	Office salaries	146,000
	Income tax withheld		$117,200
	Retirement Savings Payable		14,520
	Group Insurance Payable		11,880
	Social Security Tax Payable		39600
	Medicare Tax Payable		9900
	Salaries Payable		$466,900
	(To record salaries Payable)
b	Payroll Tax Expense	51480
	Social Security Tax Payable		39600
	Medicare Tax Payable		9900
	Federal Unemployment Tax Payable		198
	State Unemployment Tax Payable		1782
2
a	Account Title and explanation	Debit	Credit
	Sales salaries	$330,000
	Warehouse salaries	184,000
	Office salaries	146,000
	Income tax withheld		$117,200
	Retirement Savings Payable		14,520
	Group Insurance Payable		11,880
	Social Security Tax Payable		39600
	Medicare Tax Payable		9900
	Salaries Payable		$466,900
	(To record salaries Payable)
b	Payroll Tax Expense	89100
	Social Security Tax Payable		39600
	Medicare Tax Payable		9900
	Federal Unemployment Tax Payable		3960
	State Unemployment Tax Payable		35640