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Payroll accounts and year-end entries The following accounts, with the balances indicated, appear in the ledger of Codigo Co. on December 1 of the current year: 101 Salaries Payable — 102 Social Security Tax Payable 52,913 103 Medicare Tax Payable 728 104 Employees Federa1 Income Tax Payable 4,490 1 OS Employees State Income Tax Payable 4,073 T C-5 State Unemployment Tax Payable 1,260 107 Federal Unemployment Tax Payable 360 108 Retirement Savings Deductions Payable $ 2,300 109 Medical Insurance Payable 2,520 201 Sales Salaries Expense 700,000 301 Officers Salaries Expense 340,00O 401 Office Salaries Expense 125,000 408 Payroll Tax Expense 59,491 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, $728 of Medicare tax, and $4,490 of employees’ federal income tax due. 2. Issued Check No. 817 for $2,300 to Alvarez Bank to invest in a retirement savings account for employees. 12 Journalized the entry to record the biweekly payroll. A summary of the payroll record follows: 12. Issued Check No. 822 in payment of the net amount of the biweekly payroll to fund tile payroll bank account. 12. Journalized the entry to record payroll taxes on employees' earnings of December 12: social security tax, SI,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: Dec. 26. Journalized the entry to record payroll taxes on employees' earnings of December 26: social security tax, SI,455; Medicare tax, $364; state unemployment tax, SI50; federal unemployment tax, S40. 30. Issued Check No. 851 for $6,258 to State Department of Revenue, in payment of employees' state income tax due on December 31. 30. Issued Check No. 852 to Alvarez Bank for $2,300 to invest in a retirement savings account for employees. 31 Paid $55,400 to the employee pension plan. The annual pension 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.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 11, Problem 11.5BPR
Textbook Problem

Payroll accounts and year-end entries

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

101 Salaries Payable
102 Social Security Tax Payable 52,913
103 Medicare Tax Payable 728
104 Employees Federa1 Income Tax Payable 4,490
1 OS Employees State Income Tax Payable 4,073
T C-5 State Unemployment Tax Payable 1,260
107 Federal Unemployment Tax Payable 360
108 Retirement Savings  
Deductions Payable $ 2,300
109 Medical Insurance Payable 2,520
201 Sales Salaries Expense 700,000
301 Officers Salaries Expense 340,00O
401 Office Salaries Expense 125,000
408 Payroll Tax Expense 59,491

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, $728 of Medicare tax, and $4,490 of employees’ federal income tax due.
2. Issued Check No. 817 for $2,300 to Alvarez Bank to invest in a retirement savings account for employees.
12  Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:
Chapter 11, Problem 11.5BPR, Payroll accounts and year-end entries The following accounts, with the balances indicated, appear in , example  1
12. Issued Check No. 822 in payment of the net amount of the biweekly payroll to fund tile payroll bank account.
12. Journalized the entry to record payroll taxes on employees' earnings of December 12: social security tax, SI,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:

Chapter 11, Problem 11.5BPR, Payroll accounts and year-end entries The following accounts, with the balances indicated, appear in , example  2

Dec. 26.  Journalized the entry to record payroll taxes on employees' earnings of December 26: social security tax, SI,455; Medicare tax, $364; state unemployment tax, SI50; federal unemployment tax, S40.
30. Issued Check No. 851 for $6,258 to State Department of Revenue, in payment of employees' state income tax due on December 31.
30. Issued Check No. 852 to Alvarez Bank for $2,300 to invest in a retirement savings account for employees.
31 Paid $55,400 to the employee pension plan. The annual pension cost is $65,500. (Record both the payment and the unfunded pension liability.)

Instructions

  1. 1. Journalize the transactions.
  2. 2. Journalize the following adjusting entries on December 31:
    1. a. Salaries accrued: sales salaries, $4,275; officers salaries, $2,175; office salaries, $825. The payroll taxes are immaterial and are not accrued.
    2. b. Vacation pay, $13,350.

Expert Solution

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 of Solution

Prepare journal entries for the transactions.

Date Accounts and Explanations Debit ($) Credit ($)
December 1 Medical Insurance Payable 2,520  
    Cash   2,520
    (To record the payment of medical insurance premium)    
December 1 Social Security Tax Payable 2,913  
    Medicare Tax Payable 728  
    Employees Federal Income Tax Payable 4,490  
    Cash   8,131
    (To record the payment of withholdings taxes)    
December 2 Bond Deductions Payable 2,300  
    Cash   2,300
    (To record investment in a retirement savings)    
December 12 Sales Salaries Expense 14,500  
    Officers’ Salaries Expense 7,100  
    Office Salaries Expense 2,600  
    Social Security Tax Payable   1,452
    Medicare Tax Payable   363
    Employees Federal Income Tax Payable   4,308
    Employees State Income Tax Payable   1,089
    Bond Deductions Payable   1,150
    Medical Insurance Payable   420
    Salaries Payable   15,418
    (To record salaries expense and payroll deductions)    
December 12 Salaries Payable 15,418  
    Cash   15,418
    (To record the payment of salaries)    
December 12 Payroll Tax Expense 2,220  
    Social Security Tax Payable   1,452
    Medicare Tax Payable   363
    State Unemployment Tax Payable   315
    Federal Unemployment Tax Payable   90
    (To record payroll taxes expense)   ...
Expert Solution

2. a

To determine

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

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