Salaries: Deductions:
Sales salaries $ 625,000 Income tax withheld $232,260
Warehouse salaries 240,000 Social security tax withheld 71,100
Office salaries 320,000 Medicare tax withheld 17,775
$1,185,000 U.S. savings bonds 35,500
Group insurance 53,325
$409,960
Tax rates assumed:
Social security, 6%
Medicare, 1.5%
State unemployment (employer only), 5.4%
Federal unemployment (employer only), 0.8%
Instructions
1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries:
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, $30,000 is subject to unemployment compensation taxes.
2. Assuming that the payroll for the last week of the year is to be paid on January 4 of the following fiscal year, journalize the following entries:
a. December 30, to record the payroll.
b. January 4, to record the employer’s payroll taxes on the payroll to be paid on January
4. Since it is a new fiscal year, all $1,185,000 in salaries is subject to unemployment compensation taxes.
Answer:
1. a. Dec. 30 Sales Salaries Expense 625,000
Warehouse Salaries Expense 240,000
Office Salaries Expense 320,000
Employees Income Tax Payable 232,260
Social Security Tax Payable 71,100
Medicare Tax Payable 17,775
Bond Deductions Payable 35,500
Group Insurance Payable 53,325
Salaries Payable 775,040
b. Dec. 30 Payroll Tax Expense 90,735
Social Security Tax Payable 71,100
Medicare Tax Payable 17,775
State Unemployment Tax Payable1 1,620
Federal Unemployment Tax Payable2 240
1 $30,000 × 5.4%
2 $30,000 × 0.8%
2. a. Dec. 30 Sales Salaries Expense 625,000
Warehouse Salaries Expense 240,000
Office Salaries Expense 320,000
Employees Income Tax Payable 232,260
Social Security Tax Payable1 71,100
Medicare Tax Payable2 17,775
Bond Deductions Payable 35,500
Group Insurance Payable 53,325
Salaries Payable 775,040
1 $1,185,000 × 6%
2 $1,185,000 × 1.5%
b. Jan. 4 Payroll Tax Expense 162,345
Social Security Tax Payable 71,100
Medicare Tax Payable 17,775
State Unemployment Tax Payable3 63,990
Federal Unemployment Tax Payable4 9,480
3 $1,185,000 × 5.4%
4 $1,185,000 × 0.8%