Question

The following information about the payroll for the week ended December 30 was obtained from the records of Qualitech Co.: Salaries: Sales salaries $325,000 Warehouse salaries 192,000 Office salaries 137,000 $654,000 Deductions: Income tax withheld $116,200 Social security tax withheld 39,240 Medicare tax withheld 9,810 U.S. savings bonds 14,388 Group insurance 11,772 $191,410 Tax rates assumed: Social security 6% Medicare 1.5% State unemployment (employer only) 5.4% 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, 2015, journalize the following entries (refer to the Chart of Accounts for exact wording of account titles): A. December 30, 2015, to record the payroll. Include the year when enter the date in the journal. B. December 30, 2015, 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, $45,000 is subject to unemployment compensation taxes. Include the year when enter the date in the journal. 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, 2015, to record the payroll. Include the year when enter the date in the journal. B. On page 12 of the journal: January 5, 2016, to record the employer's payroll taxes on the payroll to be paid on January 5, 2016. Because it is a new fiscal year, all $654,000 in salaries is subject to unemployment compensation taxes. Include the year when enter the date in the journal.

CHART OF ACCOUNTS
Qualitech Co.
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 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 Owner, Capital 311 Owner, Drawing 312 Income Summary	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise 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

Journal

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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. Include the year when enter the date in the journal. 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, $45,000 is subject to unemployment compensation taxes. Include the year when enter the date in the journal.

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JOURNAL

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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, 2015, to record the payroll. Include the year when enter the date in the journal. B. On page 12 of the journal: January 5, 2016, to record the employer's payroll taxes on the payroll to be paid on January 5, 2016. Because it is a new fiscal year, all $654,000 in salaries is subject to unemployment compensation taxes. Include the year when enter the date in the journal.

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Answer 1

1	Date	Particulars	Debit	Credit
a.	Dec. 30	Sales Salaries Expense	$ 325,000
		Warehouse Salaries Expense	$ 192,000
		Office Salaries Expense	$ 137,000
		Employees Income Tax Payable		$ 116,200
		Social Security Tax Payable		$   39,240
		Medicare Tax Payable		$     9,810
		Bond Deductions Payable		$   14,388
		Group Insurance Payable		$   11,772
		Salaries Payable		$ 462,590
b.	Dec. 30	Payroll Tax Expense	$   51,840
		Social Security Tax Payable		$   39,240
		Medicare Tax Payable		$     9,810
		State Unemployment Tax Payable1		$     2,430
		Federal Unemployment Tax Payable2		$        360
		1$45,000 × 5.4%
		2$45,000 × 0.8%
2
a.	Dec. 30	Sales Salaries Expense	$ 325,000
		Warehouse Salaries Expense	$ 192,000
		Office Salaries Expense	$ 137,000
		Employees Income Tax Payable		$ 116,200
		Social Security Tax Payable		$   39,240
		Medicare Tax Payable		$     9,810
		Bond Deductions Payable		$   14,388
		Group Insurance Payable		$   11,772
		Salaries Payable		$ 462,590
b.	Jan. 5	Payroll Tax Expense	$   89,598
		Social Security Tax Payable		$   39,240
		Medicare Tax Payable		$     9,810
		State Unemployment Tax Payable3		$   35,316
		Federal Unemployment Tax Payable4		$     5,232
		3$654,000 × 5.4%
		4$654,000 × 0.8%