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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Payroll Taxes

Sid’s Grocery Store has 100 employees who earn a wage of $18.75 per hour. Each of Sid’s employees has worked a total of 160 hours over the month of July. At the time of recording July’s monthly payroll, the following amounts have been withheld:

Chapter 8, Problem 49BE, Payroll Taxes Sids Grocery Store has 100 employees who earn a wage of $18.75 per hour. Each of Sids

Also, the unemployment tax rate is 2% and applies to all but $30,000 of the gross payroll.

Required:

1. What is the amount of net pay recorded by Sid’s?

2. Make the journal entries to record the payroll.

To determine

Concept introduction:

Liabilities:

Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period/ years, for example long term loan.

Requirement 1:

To calculate:

The net amount payable for Salaries.

Explanation

The net amount payable for Salaries is calculated as follows:

Gross Pay (100*160*18.75) $ 300,000
Less:
Federal Income Taxes Payable $ (30,000)
State Income Taxes Payable $ (8,000)
Social Security Tax Payable $ (18,600...
To determine

Concept introduction:

Liabilities:

Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period/ years, for example long term loan.

Requirement 2:

To prepare:

The Journal entry to record the payroll.

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