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 salaries186,000 Office salaries144,000 $665,000 Deductions: Income tax withheld$116,800 Social security tax withheld39,900 Medicare tax withheld9,975 Retirement savings14,630 Group insurance11,970 $193,275 Tax rates assumed: Social security6%Medicare1.5%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.CHART OF ACCOUNTS Pharrell Co. General Ledger ASSETS110Cash111Accounts Receivable112Interest Receivable113Notes Receivable115Merchandise Inventory116Supplies118Prepaid Insurance120Land123Building124Accumulated Depreciation-Building125Office Equipment126Accumulated Depreciation-Office Equipment LIABILITIES210Accounts Payable213Interest Payable214Notes Payable215Salaries Payable216Social Security Tax Payable217Medicare Tax Payable218Employees Income Tax Payable220Group Insurance Payable221Retirement Savings Payable222Union Dues Payable224Federal Unemployment Tax Payable225State Unemployment Tax Payable226Vacation Pay Payable227Unfunded Pension Liability EQUITY310Owner, Capital311Owner, Drawing312Income Summary REVENUE410Sales610Interest Revenue EXPENSES510Cost of Merchandise Sold520Sales Salaries Expense521Warehouse Salaries Expense522Office Salaries Expense524Depreciation Expense-Building525Delivery Expense526Repairs Expense529Selling Expenses531Rent Expense532Depreciation Expense-Office Equipment533Insurance Expense534Supplies Expense535Payroll Tax Expense536Vacation Pay Expense537Pension Expense538Cash Short and Over540Miscellaneous Expense710Interest Expense

Answered: The following information about the…

College Accounting (Book Only): A Career Approach

12th Edition

ISBN:9781305084087

Author:Cathy J. Scott

Publisher:Cathy J. Scott

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.

CHART OF ACCOUNTS

Pharrell Co.

General Ledger

	ASSETS
110	Cash
111	Accounts Receivable
112	Interest Receivable
113	Notes Receivable
115	Merchandise Inventory
116	Supplies
118	Prepaid Insurance
120	Land
123	Building
124	Accumulated Depreciation-Building
125	Office Equipment
126	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
213	Interest Payable
214	Notes Payable
215	Salaries Payable
216	Social Security Tax Payable
217	Medicare Tax Payable
218	Employees Income Tax Payable
220	Group Insurance Payable
221	Retirement Savings Payable
222	Union Dues Payable
224	Federal Unemployment Tax Payable
225	State Unemployment Tax Payable
226	Vacation Pay Payable
227	Unfunded Pension Liability

	EQUITY
310	Owner, Capital
311	Owner, Drawing
312	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Sales Salaries Expense
521	Warehouse Salaries Expense
522	Office Salaries Expense
524	Depreciation Expense-Building
525	Delivery Expense
526	Repairs Expense
529	Selling Expenses
531	Rent Expense
532	Depreciation Expense-Office Equipment
533	Insurance Expense
534	Supplies Expense
535	Payroll Tax Expense
536	Vacation Pay Expense
537	Pension Expense
538	Cash Short and Over
540	Miscellaneous Expense
710	Interest Expense

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