Question

Payroll related:

1A. Payroll for the week ending December 31 totaled $6,500. It was actually paid January 3 of the following year. There was no other unpaid payroll. At December 31, the Payroll payable account per the General ledger had a CR balance of $3,200. What adjusting journal entry (if any) should be recorded on December 31?

1B.. Given the following information. Prepare the journal entry necessary to record the payment of September payroll on October 3 (assume the payroll accrual was previously made). Gross pay: $100,000; Federal income tax withheld ( Fed w/h): $20,000; FICA/Med. w/h: $7,650; State w/h: $5,000

1C. On October 3, accrue the employer matching of the FICA/Med. (PR Taxes: FICAER) of $7,650.

1D. Accrue a bonus of $40,000 at year-end. Assume that this is the first year of the bonus plan.

Answer 1

Answer 1A.      Adjusting journal entry for the year ended 31 st december.

payroll (salary) Account       debit            $3300

                               to payroll payable Account                                 $3300

( being payroll payable account credited short by $ 3300, now rectified)

Actually we a have total of $6500 which have to be paid tilll 31st december but actually paid on january 3 of the following year. And general payroll payable account already had a credit a balance of $3200 so we need to credit $3300 more(6500-3200) to attain the total amount upto $6500.

Also, $3300 should be debited to profit & loss Account. journal entry for this is:

profit & loss account       debit           $3300

to payroll(salary) account                          $3300

(being $3300 debited to profit & loss account which was not debited earlier)

note: now there is total $6500 ($3200 given in question + $ 3300) credit balance in the general payroll payable account which will be debited on january 3 and credited to bank account, when amount actually paid to employees.

Answer 1B:    Journal entries of the payroll for the month of september paid on october 3:

As per the question accrural journal entry of Payroll already made so we have to pass only payment made to employee related journal entry:

payroll ( salary) payable   Account         debit       $67350

to bank    Account                                                     $67350

(being net salary i.e. after deduction of all allowances & taxes paid to employee)

journal entry related to payment of all deductions earlier made and already shown in current liabilities will be :

(october 3)

fed w/h   payable account     debit          $20000

fica/med. w/h payable account       debit      $7650(only employees share)

state w/h payable    account      debit          $5000

to Bank   account                                    $32650

( being all amount deposited in the bank account of respective organisation)

Answer 1c:    Actually equal amount which is deducted out of employees salary i.e. FICA/MED $7650, also submitted by employer

Journal entry (october 3)

Employer FICH/Med contribution      Account       debit     $7650

to FICH/med payable       Account                                           $7650

(being equal amount of FICH/med contributed by employer also)

Answer 1D: Bonus Accrue to employee at the end of the year:

journal entry:

bonus expenses    account       debit       $40,000

to bonus payable account                    $40,000

(being bonus due to employees at the end of the year which will be paid in the next year)