Question

chapter 10-02

instructions

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

Salaries:		Deductions:
Sales salaries	$325,000	Income tax withheld	$119,000
Warehouse salaries	196,000	U.S. savings bonds	14,344
Office salaries	131,000	Group insurance	11,736
	$652,000

Tax rates assumed:
Social security	6%	State unemployment (employer only)	5.4%
Medicare	1.5%	Federal unemployment (employer only)	0.8%

	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, $44,000 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): On page 11 of the journal: December 30, to record the payroll. On page 12 of the journal: January 5, to record the employer's payroll taxes on the payroll to be paid on January 5. Since it is a new fiscal year, all $652,000 in salaries is subject to unemployment compensation taxes. CHART OF ACCOUNTS Boltz Co. General Ledger ASSETS 110 Cash 111 Accounts Receivable 112 Interest Receivable 113 Notes Receivable 115 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 Salaries Payable 216 Social Security Tax Payable 217 Medicare Tax Payable 218 Employees Income Tax Payable 220 Group Insurance Payable 221 Bond Deductions Payable 222 Union Dues Payable 223 Retirement Savings Deductions Payable 224 Federal Unemployment Tax Payable 225 State Unemployment Tax Payable 226 Vacation Pay Payable 227 Unfunded Pension Liability EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 313 Income Summary REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Sales Salaries Expense 521 Warehouse Salaries Expense 522 Office Salaries 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 540 Miscellaneous Expense 710 Interest Expense Scroll down to access additional pages of the journal. 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, $44,000 is subject to unemployment compensation taxes. PAGE 11 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Solution DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Points: Feedback Check My Work Explanation 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. Since it is a new fiscal year, all $652,000 in salaries is subject to unemployment compensation taxes. PAGE 11 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5 6 7 8 9 Solution DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5 6 7 8 9 Points: PAGE 12 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5

Answer 1

Date	Accounts Title	Post Ref	Dr	Cr	Asset	Liabilities	Equity
a
30-Dec	Sales Salaries Expense	520	$325,000				($325,000)
	Warehouse Salaries Expense	521	196000				($196,000)
	Office Salaries Expense	522	131000				($131,000)
	Employees Income Tax Payable	218		119000		119000
	Bond Deductions Payable	221		14344		14344
	Group Insurance Payable	220		11736		11736
	Social Security Tax Payable (652000*6%)	216		39120		39120
	Medicare Tax Payable (652000*1.5%)	217		9780		9780
	Salaries Payable	215		$458,020		458020
b
30-Dec	Payroll Tax expenses	535	51628				-51628
	Social Security Tax Payable (652000*6%)	216		39120		39120
	Medicare Tax Payable (652000*1.5%)	217		9780		9780
	Federal Unemployment Tax Payable (44000*.8%)	224		352		352
	State Unemployment Tax Payable (44000*5.4%)	225		2376		2376
2)
a)
30-Dec	Sales Salaries Expense	520	$325,000				($325,000)
	Warehouse Salaries Expense	521	196000				($196,000)
	Office Salaries Expense	522	131000				($131,000)
	Employees Income Tax Payable	218		119000		119000
	Bond Deductions Payable	221		14344		14344
	Group Insurance Payable	220		11736		11736
	Social Security Tax Payable (652000*6%)	216		39120		39120
	Medicare Tax Payable (652000*1.5%)	217		9780		9780
	Salaries Payable	215		$458,020		458020
b)	Payroll Tax expenses	535	89324				-89324
	Social Security Tax Payable (652000*6%)	216		39120		39120
	Medicare Tax Payable (652000*1.5%)	217		9780		9780
	Federal Unemployment Tax Payable (652000*.8%)	224		5216		5216
	State Unemployment Tax Payable (652000*5.4%)	225		35208		35208
	If any doubt please comment