Question

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

Salaries:		Deductions:
Sales salaries	$540,000	Income tax withheld	$160,000
Warehouse salaries	155,000	U.S. savings bonds	10,500
Office salaries	85,000	Group insurance	9,000
	$780,000

 

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, $48,000 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 $780,000 in salaries is subject to unemployment compensation taxes.

Answer 1

1	a.	Dec.	30	Sales Salaries Expense	$ 540,000
				Warehouse Salaries Expense	$ 155,000
				Office Salaries Expense	$ 85,000
				Employees Income Tax Payable		$ 160,000
				Social Security Tax Payable ($780,000 * 6%)		$ 46,800
				Medicare Tax Payable ($780,000 * 1.5%)		$ 11,700
				Bond Deductions Payable		$ 10,500
				Group Insurance Payable		$ 9,000
				Salaries Payable		$ 542,000
	b.	Dec.	30	Payroll Tax Expense	$ 61,476
				Social Security Tax Payable		$ 46,800
				Medicare Tax Payable		$ 11,700
				State Unemployment Tax Payable ($48,000*5.4%)		$ 2,592
				Federal Unemployment Tax Payable ($48,000 * 0.8%)		$ 384
2	a.	Dec.	30	Sales Salaries Expense	$ 540,000
				Warehouse Salaries Expense	$ 155,000
				Office Salaries Expense	$ 85,000
				Employees Income Tax Payable		$ 160,000
				Social Security Tax Payable ($780,000 * 6%)		$ 46,800
				Medicare Tax Payable ($780,000 * 1.5%)		$ 11,700
				Bond Deductions Payable		$ 10,500
				Group Insurance Payable		$ 9,000
				Salaries Payable		$ 542,000
	b.	Dec.	30	Payroll Tax Expense	$ 106,860
				Social Security Tax Payable		$ 46,800
				Medicare Tax Payable		$ 11,700
				State Unemployment Tax Payable ($780,000*5.4%)		$ 42,120
				Federal Unemployment Tax Payable ($780,000 * 0.8%)		$ 6,240