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Entries for payroll and payroll taxes The following information about the payroll for the week ended December 30 was obtained from the records of Pharrell Co.: Instructions 1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries: 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, $40,000 is subject to unemployment compensation taxes. 2. Assuming that the payroll for the last week of the year is to be paid on January 5 of the following fiscal year, journalize the following entries: a. December 30, to record the payroll. b. January 5, to record the employer’s payroll taxes on the payroll to be paid on January 5. Because it is a new fiscal year, all salaries are subject to unemployment compensation taxes.

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 11, Problem 2PA
Textbook Problem
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Entries for payroll and payroll taxes

The following information about the payroll for the week ended December 30 was obtained from the records of Pharrell Co.:

Chapter 11, Problem 2PA, Entries for payroll and payroll taxes The following information about the payroll for the week ended

Instructions

  1. 1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries:
    1. a. December 30, to record the payroll.
    2. 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, $40,000 is subject to unemployment compensation taxes.
  2. 2. Assuming that the payroll for the last week of the year is to be paid on January 5 of the following fiscal year, journalize the following entries:
    1. a. December 30, to record the payroll.
    2. b. January 5, to record the employer’s payroll taxes on the payroll to be paid on January 5. Because it is a new fiscal year, all salaries are subject to unemployment compensation taxes.

1.  a

To determine

Journalize the entry to record the payroll on December 30.

Explanation of Solution

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 are called employer payroll taxes. Such taxes are not withheld from employees’ gross earnings but instead they are paid by employer.

Prepare journal entry to record the payroll on December 30.

DateAccounts and ExplanationPost RefDebit ($)Credit ($)
December 30Sales Salaries Expense 402,000 
 Warehouse Salaries Expense 210,000 
 Office salaries Expense 165,000 
   Social Security Taxes Payable (1)  46,620
Medicare Taxes Payable (2)11,655
Employees Income Taxes Payable 135,975
   Retirement Savings Payable  17,094
   Group Insurance Payable  13,986
Salaries Payable...

1.b

To determine

Journalize the employer’s payroll taxes expense on December 30.

2. a

To determine

Journalize the entry to record the payroll on December 30.

2. b

To determine

Journalize the employer’s payroll taxes expense on January 5.

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Financial Accounting
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