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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: The following transactions relating to payroll, payroll deductions, and payroll taxes Occurred during December: Dec. 2. Issued Check No. 410 for $3,400 to Jay Bank to invest in a retirement savings account for employees. 2. Issued Check No. 411 to Jay Bank for $27,046, in payment of $9,273 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: 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 December13: 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 record follows: 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 December27: 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 $3,400 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. Journalize the transactions. 2. Journalize the following adjusting entries on December 31: a. Salaries accrued: operations salaries, $8,560; officers salaries, $5,600; office salaries,$1,400. The payroll taxes are immaterial and are not accrued. b. Vacation pay, $15,000.

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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 5PA
Textbook Problem
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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:

Chapter 11, Problem 5PA, Payroll accounts and year-end entries The following accounts, with the balances indicated, appear in , example  1

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

Dec. 2. Issued Check No. 410 for $3,400 to Jay Bank to invest in a retirement savings account for employees.

2. Issued Check No. 411 to Jay Bank for $27,046, in payment of $9,273 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:

Chapter 11, Problem 5PA, Payroll accounts and year-end entries The following accounts, with the balances indicated, appear in , example  2

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 December13: 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 record follows:

Chapter 11, Problem 5PA, Payroll accounts and year-end entries The following accounts, with the balances indicated, appear in , example  3

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 December27: 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 $3,400 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

Prepare journal entries for the transactions.

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.

Prepare journal entries for the transactions.

DateAccounts and ExplanationPost RefDebit ($)

Credit

($)

December2Retirement Savings Deductions Payable 3,400 
  Cash  3,400
  (To record investment in a retirement savings)   
December2Social 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)   
December13Operations 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)   
December13Salaries Payable 46,296 
  Cash  46,296
  (To record the payment of salaries)   

Table (1)

DateAccounts and ExplanationPost RefDebit ($)Credit ($)
December13Payroll 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)   
December16Social Security Tax Payable 9,264 
  Medicare Tax Payable

2. a

To determine

Journalize the adjusting entry for accrued salaries on December 31.

2. b

To determine

Journalize the adjusting entry for vacation pay expense on December 31.

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Financial Accounting
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