Question

Kipley Company is a small manufacturing firm located in Pittsburgh, Pennsylvania. The company has a workforce of both hourly and salaried employees. Each employee is paid for hours actually worked during each week, with the time worked being recorded in quarter-hour increments. The standard workweek consists of 40 hours, with all employees being paid time and one-half for any hours worked beyond the 40 regular hours. Wages are paid every Friday, with one week’s pay being held back by the company. Thus, the first payday for Kipley Company is January 14 for the workweek ending January 8 (Saturday). The total deductions for employees' payroll is shown below.

OASDI $467.75

HI 109.40

FIT 458.00

SIT 231.61

SUTA 5.29

CIT 226.31

Simple deductions 440.00

Group insurance 6.80

Health insurance 16.50

Total deductions 1,961.66

The amount for total earnings was $7,544.31.

Below is the information provided from the payroll register of Kipley Company, Inc. KIPLEY COMPANY, INC. Payroll Register

Time Card No. Name GRP. INS. HEALTH INS. CK. NO. AMT.

11 Carson, F. $0.85 $1.65 313 $504.97

12 Wilson, W. 0.85 1.65 314 601.83

13 Utley, H. 0.85 1.65 315 511.65

21 Fife, L. 0.85 1.65 316 668.65

22 Smith, L. 1.65 317 582.41

31 Fay, G. 0.85 1.65 318 412.30

32 Robey, G. 0.85 1.65 319 484.66

33 Schork, T. 1.65 320 524.83

51 Hardy, B. 0.85 1.65 321 533.75

99 Kipley, C. 0.85 1.65 322 757.

60 Totals $6.80 $16.50 $5,582.65

a. Prepare the journal entries as of January 12 to record the payroll and the payroll taxes for the week ending January 8. Credit Salaries Payable for the total net pay. Use the following tax rates and bases: employer’s FICA—OASDI, 6.2% on the first $118,500; employer’s FICA—HI, 1.45% on total earnings; FUTA, 0.6% on the first $7,000; and SUTA, 3.6785% on the first $9,500. For a compound transaction, if an amount box does not require an entry, leave it blank. If required, round your answers to the nearest cent.

b. Prepare the journal entry to record the payment of the payroll on January 14 when the paychecks are distributed to all workers. If required, round your answers to the nearest cent.

Answer 1

SOLUTION TO PART b PAYROLL EXPENSES A/C DR. 7544.30 EMPLOYER FICA-OASDI A/C DR. 467.70 EMPLOYER FICA-HI A/C DR. 109.40 EMPLOYER FUTA A/C DR. 45.30 EMPLOYER SUTA A/C DR. 277.60 TO SALARIES PAYABLE 5582.70 TO FICA-OASDI (EMPLOYER) PAYABLE 467.70 TO FICA-OASDI (EMPLOYEE) PAYABLE 467.80 TO EMPLOYER FICA-HI A/C PAYABLE 109.40 TO EMPLOYEE FICA-HI A/C PAYABLE 109.40 TO EMPLOYER FUTA A/C PAYABLE 45.30 TO EMPLOYEE FIT PAYABLE 458.00 TO EMPLOYEE SIT PAYABLE 231.60 TO EMPLOYER SUTA A/C PAYABLE 277.50 TO EMPLOYEE SUTA A/C PAYABLE 5.30 TO EMPLOYEE CIT A/C PAYABLE 226.30 TO SIMPLE DEDUCTION 440.00 TO GROUP INSURANCE 6.80 TO HEALTH INSURANCE 16.50
(Being salary expenses recorded in books) SALARIES PAYABLE A/C DR. 5582.7 TO RESPECTIVE EMPLOYEE NAME 5582.7 (Being salary credited to respective employee account) RESPECTIVE EMPLOYEE NAME A/C DR. 5582.7 TO BANK 5582.7 (Being salary paid )