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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Payroll entries

The payroll register for Gamble Company for the week ended April 29 indicated the following:

Salaries $1,250,000.00
Social security tax withheld 75,000
Medicare tax withheld I8,750
Federal income tax withheld 250,000

In addition, state and federal unemployment taxes were calculated at the rate of 5.4% and 0.6% respectively, on $225,000 of salaries.

  1. a. Journalize the entry to record the payroll for the week of April 29.
  2. b. Journalize the entry to record the payroll tax expense incurred for the week of April 29.

A.

To determine

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.

To Journalize: The entry to payroll for the week of April 29.

Explanation

  • Salaries expense is an expense and it decreases equity value. So, debit it by $1,250,000.
  • Social security taxes payable is a liability and it is increased. So, credit it by $75,000.
  • Medicare taxes payable is a liability and it is increased...

B.

To determine

To Journalize: The payroll taxes expense incurred for the week of April 29.

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