Chapter 10, Problem 10.5BPR

Payroll accounts and year-end entries

The following accounts, with the balances indicated, appear in the ledger of Garcon Co. on December 1 of the current year:

101 Salaries Payable	—	108 Bond Deductions Payable	$ 2,300
102 Social Security Tax Payable	$ 2,913	109 Medical Insurance Payable	2,520
103 Medicare Tax Payable	728	201 Operations Salaries Expense	700,000
104 Employees Federal Income Tax Payable	4,490	301 Officers Salaries Expense	340,000
105 Employees State Income Tax Payable	4,078	401 Office Salaries Expense	155,000
106 State Unemployment Tax Payable	1,260	408 Payroll Tax Expense	59,491
107 Federal Unemployment Tax Payable	360

The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December:

Dec. 1.	Issued Check No. 815 to Aberderas Insurance Company for $2,520, in payment of the semiannual premium on the group medical insurance policy.
1.	Issued Check No. 816 to Alvarez Bank for $8,131, in payment for $2,913 of social security tax, $728ofMedicare tax, and $4,490 of employees’ federal income tax due.
2.	Issued Check No. 817 for $2,300 to Alvarez Bank to purchase U.S. savings bonds for employees.
Dec. 12.	Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:
	Salary distribution:
	Operations	$14,500
	Officers	7,100
	Office	2,600	$24,200
	Deductions:
	Social security tax	$1,452
	Medicare tax	363
	Federal income tax withheld	4,308
	State income tax withheld	1,089
	Savings bond deductions	1,150
	Medical insurance deductions	420	8,782
	Net amount		$15,418
12.	Issued Check No. 822 in payment of the net amount of the biweekly payroll.
12.	Journalized the entry to record payroll taxes on employees’ earnings of December 12: social security tax, $1,452; Medicare tax, $363; state unemployment tax, $315; federal unemployment tax, $90.
15.	Issued Check No. 830 to Alvarez Bank for $7,938, in payment of $2,904 of social security tax, $726 of Medicare tax, and $4,308 of employees’ federal income tax due.
26.	Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:
	Salary distribution:
	Operations	$14,250
	Officers	7,250
	Office	2,750	$24,250
	Deductions:
	Social security tax	$ 1,455
	Medicare tax	364
	Federal income tax withheld	4,317
	State income tax withheld	1,091
	Savings bond deductions	1,150	8,377
	Net amount		$15,873
Dec. 26.	Issued Check No. 840 for the net amount of the biweekly payroll.
26.	Journalized the entry to record payroll taxes on employees’ earnings of December 26: social security tax, $1,455; Medicare tax, $364; state unemployment tax, $150; federal unemployment tax, $40.
30.	Issued Check No. 851 for $6,258 to State Department of Revenue, in payment of employees’ state income tax due on December 31.
31.	Issued Check No. 852 to Alvarez Bank for $2,300 to purchase U.S. savings bonds for employees.
31.	Paid $55,400 to the employee pension plan. The annual pens1on cost is $65,500. (Record both the payment and the unfunded pension liability.)

Instructions

1.    Journalize the transactions.

2.    Journalize the following adjusting entries on December 31:

A. Salaries accrued: sales salaries, $4,275; officers salaries, $2,175; office salaries, $825. The payroll taxes are immaterial and are not accrued.

B. Vacation pay, $13,350.