# The following information about the payroll for the week ended December 30 was obtainedfrom the records of Pharrell Co.:Salaries:Deductions:\$402,000Sales salariesIncome tax withheld\$135,975Social security tax withheld46,620Warehouse salaries210,000Office salariesMedicare tax withheld165,00011,655Retirement savings\$777,00017,094Group insurance13,986\$225,330Tax rates assumed:Social security, 6%Medicare, 1.5%State unemployment (employer only), 5.4%Federal unemployment (employer only), 0.6% Instructions1. 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 onDecember 31. Of the total payroll for the last week of the year, \$40,000 is subjectto unemployment compensation taxes.2. Assuming that the payroll for the last week of the year is to be paid on January 5 ofthe following fiscal year, journalize the following entries:a. December 30, to record the payroll.b. January 5, to record the employer's payroll taxes on the payroll to be paid onJanuary 5. Because it is a new fiscal year, all salaries are subject to unemploymentcompensation taxes.

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Step 1

Payroll: The total payment that a company is required to pay to its employee for the services received is called as payroll.

Payroll withholding deduction: The amounts which the employer withheld from employees’ gross pay to deduct taxes such as federal income tax, state income tax, local income tax, and social security tax are called payroll withholding deduction.

Employer payroll taxes: The taxes which the employer must pay to the employees with their salaries is called employer payroll taxes. Such taxes are not withheld from employees’ gross earnings but instead they are paid by employer.

Step 2

1. a

Prepare journal entry to record the payroll on December 30.

Step 3

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