Question

Exercise 13-7

Pearl Hardware Company’s payroll for November 2017 is summarized below.

					Amount Subject to Payroll Taxes
						Unemployment Tax
Payroll		Wages Due		FICA		Federal		State
Factory		$122,700		$122,700		$42,200		$42,200
Sales		32,400		32,400		3,700		3,700
Administrative		32,900		32,900
Total		$188,000		$188,000		$45,900		$45,900

At this point in the year, some employees have already received wages in excess of those to which payroll taxes apply. Assume that the state unemployment tax is 2.5%. The FICA rate is 7.65% on an employee’s wages to $118,500 and 1.45% in excess of $118,500. Of the $188,000 wages subject to FICA tax, $21,700 of the sales wages is in excess of $118,500. Federal unemployment tax rate is 0.8% after credits. Income tax withheld amounts to $17,200 for factory, $7,700 for sales, and $6,600 for administrative.

Prepare a schedule showing the employer’s total cost of wages for November by function. (Round answers to 0 decimal places, e.g. 5,275.)

	Factory	Sales	Administrative	Total
Salaries and Wages
FICA Taxes
FUTA Taxes
SUTA Taxes
Total Cost

Prepare the journal entries to record the factory, sales, and administrative payrolls including the employer’s payroll taxes. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,125.)

Account Titles and Explination	Debit	Credit
Factory Paroll:	Debit	Credit

(To Record Salaries and Wages Expense) (To Record Payroll tax expense) Sales Payroll: Debit Credit (Tot Record Salaries and Wages Exense) (To Record Payroll Tax Expense) Administrative Payroll Debit Credit (To record salaries and wages expense) (to record payroll tax expense)

Answer 1