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Use Figure 12.15 to complete the following problem. Roland Inc. employees’ monthly gross pay information and their W-4 Form withholding allowances follow. Roland’s payroll deductions include FICA Social Security at 6.2%, FICA Medicare at 1.45%, FUTA at 0.6%, SUTA at 5.4%, federal income tax (based on withholdings table) of gross pay, state income tax at 3% of gross pay, and health insurance coverage premiums of $1,000 split 50% employees and 50% employer. Assume each employee files as single, gross income is the same amount each month, October is the first month of business operation for the company, and salaries have yet to be paid. Record the entry or entries for accumulated employee and employer payroll for the month of October; dated October 31.

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 12, Problem 10PB
Textbook Problem
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Use Figure 12.15 to complete the following problem. Roland Inc. employees’ monthly gross pay information and their W-4 Form withholding allowances follow.

Chapter 12, Problem 10PB, Use Figure 12.15 to complete the following problem. Roland Inc. employees monthly gross pay

Roland’s payroll deductions include FICA Social Security at 6.2%, FICA Medicare at 1.45%, FUTA at 0.6%, SUTA at 5.4%, federal income tax (based on withholdings table) of gross pay, state income tax at 3% of gross pay, and health insurance coverage premiums of $1,000 split 50% employees and 50% employer. Assume each employee files as single, gross income is the same amount each month, October is the first month of business operation for the company, and salaries have yet to be paid.

Record the entry or entries for accumulated employee and employer payroll for the month of October; dated October 31.

To determine

Introduction:

Jouranalising refers to the procedure of recording a transactions in the books of accounts by debiting and crediting accounts, along with an explanation given for the transaction.

To prepare:

Recording of journal entry

Explanation of Solution

Journal entry for recognition of employee payroll for the month of October:

Date Account Debit ($) Credit ($)
October 31 Salaries Expense 4,5001
FICA social security tax payable 2791
FICA medicare tax payable 65.251
Federal income tax payable 1511
State income tax payable 1351
Health insurance payable 15001
Salaries payable 2,369.751
(To recognise employees payroll for the month of october.)

Table (1)

  • Salaries expense is an expense account for employer and it is increased by $4,500. Therefore, debit the salaries expense account with $4,500.
  • FICA social security tax payable is a liability and it is increased by $279. Therefore, credit the FICA social security tax payable account with $279.
  • FICA medicare tax payable is a liability and it is increased by $65.25. Therefore, credit the FICA medicare tax payable account with $65.25.
  • Federal income tax payable is a liability and it is increased by $151. Therefore, credit the Federal income tax payable account with $151.
  • State income tax payable is a liability and it is increased by $135. Therefore, credit the state income tax payable account with $135.
  • Health insurance payable is a liability and it is increased by $1500. Therefore, credit the health insurance payable account with $1500.
  • Salaries payable is a liability and it is increased by $2,369.75. Therefore, credit the salaries payable account with $2,369.75.

Journal entry for recognition of employer payroll liabilities for the month of October

Date Account Debit ($) Credit ($)
October 31 Employer payroll taxexpense 614.25
Federal unemployment tax payable 271
State unemployment tax payable 2431
FICA social security tax payable 2791
FICA medicare tax payable 65.251
(To recognise employer payroll liabilities for the month of October.)

Table (2)

  • Employer payroll tax expense is an expense account for employer and it is increased by $614.25. Therefore, debit the employer payroll tax expense account with $.
  • Federal unemployment tax payable is aliability and it is increased by $27...

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Chapter 12 Solutions

Principles of Accounting Volume 1
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