The following information about the payroll for the week ended December 30 was obtained from the records of Pharrell Co.: Salaries: Sales salaries $335,000 Warehouse salaries 186,000 Office salaries 144,000 $665,000 Deductions: Income tax withheld $116,800 Social security tax withheld 39,900 Medicare tax withheld 9,975 Retirement savings 14,630 Group insurance 11,970 $193,275 Tax rates assumed: Social security 6% Medicare 1.5% State unemployment (employer only) 5.4% Federal unemployment (employer only) 0.6% 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, $38,000 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): A. On page 11 of the journal: December 30, to record the payroll. B. On page 12 of the journal: January 5, to record the employer’s payroll taxes on the payroll to be paid on January 5. Because it is a new fiscal year, all salaries are subject to unemployment compensation taxes.

College Accounting (Book Only): A Career Approach

13th Edition

ISBN:9781337280570

Author:Scott, Cathy J.

Publisher:Scott, Cathy J.

Chapter8: Employer Taxes, Payments, And Reports

Section: Chapter Questions

Problem 2PA

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Question

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


Salaries:
Sales salaries	$335,000
Warehouse salaries	186,000
Office salaries	144,000
	$665,000

Deductions:
Income tax withheld	$116,800
Social security tax withheld	39,900
Medicare tax withheld	9,975
Retirement savings	14,630
Group insurance	11,970
	$193,275

Tax rates assumed:
Social security	6%
Medicare	1.5%
State unemployment (employer only)	5.4%
Federal unemployment (employer only)	0.6%

Required:

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, $38,000 is subject to unemployment compensation taxes.

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, to record the payroll.
B.	On page 12 of the journal: January 5, to record the employer’s payroll taxes on the payroll to be paid on January 5. Because it is a new fiscal year, all salaries are subject to unemployment compensation taxes.

Expert Solution

Step 1

Salary expense include basic salary and all type of allowance provided by the company in addition to the basic salary. Journal entry salary expense by debiting salary expense and crediting expense payable.

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