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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 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:

211 Salaries Payable
212 Social Security Tax Payable $ 9,273
213 Medicare Tax Payable 2,318
214 Employees Federal Income Tax Payable 15,455
215 Employees State Income Tax Payable 13,909
216 State Unemployment Tax Payable 1,400
217 Federal Unemployment Tax Payable SOO
218 Retirement Savings Deductions Payable $3,400
219 Medical Insurance Payable 27r000
411 Operations Salaries Expense 950.000
S11 Officers Salaries Expense 600,000
SI 2 Office Salaries Expense 150.000
S19 Payroll Tax Expense 137,951

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

Dec. 2. Issued Check No. 410 for 53,400 to Jay Bank to invest in a retirement savings account for employees.
2. Issued Check No. 411 to Jay Bank for 527,046, in payment of 59,273 of social security tax, 2,318 of Medicare tax, and $15,455 of employees’ federal income tax due.
13 Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:

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Dec. 13. Issued Check No. 420 in payment of the net amount of the biweekly payroll to fund the payroll bank account.
13. Journalized the entry to record payroll taxes on employees' earnings of December 13: social security tax. $4,632; Medicare tax, $1,158; state unemployment tax. $350; federal unemployment tax, $125.
16. Issued Check No. 424 to Jay Bank for $27,020. in payment of $9,264 of social security tax, $2,316 of Medicare tax, and $15,440 of employees' federal income tax due.
19. Issued Check No. 429 to Sims-Walker Insurance Company for $31,500, in payment of the semiannual premium on the group medical insurance policy.
27. Journalized the entry to record the biweekly payroll. A summary of the payroll

images

27. Issued Check No. 541 in payment of the net amount of the biweekly payroll to fund the payroll bank account.
27. Journalized the entry to record payroll taxes on employees' earnings of December 27: social security tax, $4,668; Medicare tax. $1,167: state unemployment tax, $225; federal unemployment tax, $75.
27. Issued Check No. 543 for $20,884 to State Department of Revenue in payment of employees' state income tax due on December 31.
31. Issued Check No. 545 to Jay Bank for $3400 to invest in a retirement savings account for employees.
31. Paid $45,000 to the employee pension plan. The annual pension cost is $60,000. (Record both the payment and unfunded pension liability.)

Instructions

  1. 1. Journalize the transactions.
  2. 2. Journalize the following adjusting entries on December 31:
    1. a. Salaries accrued: operations salaries, $8,560; officers salaries, $5,600: office salaries, $1,400. The payroll taxes are immaterial and are not accrued.
    2. b. Vacation pay, $15,000.

1.

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.

To Prepare: journal entries for the transactions.

Explanation

Prepare journal entries for the transactions.

Date Accounts and Explanation Post Ref Debit ($)

Credit

($)

December 2 Bond Deductions Payable 3,400  
    Cash     3,400
    (To record investment in a retirement savings)      
December 2 Social Security Tax Payable 9,273  
    Medicare Tax Payable 2,318  
    Employees Federal Income Tax Payable 15,455  
    Cash     27,046
    (To record the payment of withholdings taxes)      
December 13 Operations Salaries Expense 43,200  
    Officers’ Salaries Expense 27,200  
    Office Salaries Expense 6,800  
    Social Security Tax Payable     4,632
    Medicare Tax Payable     1,158
    Employees Federal Income Tax Payable     15,440
    Employees State Income Tax Payable     3,474
    Bond Deductions Payable     1,700
    Medical Insurance Payable     4,500
    Salaries Payable     46,296
    (To record salaries expense and payroll deductions)      
December 13 Salaries Payable 46,296  
    Cash     46,296
    (To record the payment of salaries)      

Table (1)

Date Accounts and Explanation Post Ref Debit ($) Credit ($)
December 13 Payroll Tax Expense 6,265  
    Social Security Tax Payable     4,632
    Medicare Tax Payable     1,158
    State Unemployment Tax Payable     350
    Federal Unemployment Tax Payable     125
    (To record payroll taxes expense)      
December 16 Social Security Tax Payable 9,264  
    Medicare Tax Payable 2,316  
    Employees Federal Income Tax Payable 15,440  
   

2. a

To determine

To Journalize:  The adjusting entry for accrued salaries on December 31.

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