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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Lynden Company has the following balances in its general ledger as of June 1 of this year:

  1. a. FICA Social Security Tax Payable (employee and employer) is $1,393.50. FICA Medicare Tax Payable (employee and employer) is $325.90.
  2. b. Employees’ Federal Income Tax Payable (liability for May), $995.00.
  3. c. Federal Unemployment Tax Payable (liability for April and May), $380.00.
  4. d. State Unemployment Tax Payable (liability for April and May), $1,205.75.

The company completed the following transactions involving the payroll during June and July:

June 13    Issued check for $2,714.40, payable to Security Bank, for the monthly deposit of May FICA taxes and employees’ federal income tax withheld.

30    Recorded the payroll entry in the general journal from the payroll register for June. The payroll register has the following column totals:

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30    Recorded payroll taxes. FICA Social Security rates are 6.2 percent (employee) and 6.2 percent (employer). The employer matches the employee’s FICA Medicare rate of 1.45 percent. State unemployment tax is 5.4 percent, and federal unemployment tax is 0.6 percent. At this time, all employees’ earnings are taxable for FICA and unemployment taxes.

30    Issued check for $13,639.27 from Cash—Payroll Bank Account to pay salaries for the month.

July 14    Issued check for $4,270.46, payable to Security Bank, for the monthly deposit of June FICA taxes (employee and employer) and employees’ federal income tax withheld.

31    Issued check for $2,104.15, payable to the State Tax Commission, for state unemployment tax for April, May, and June. The check was accompanied by the quarterly tax return.

31    Issued check for $479.82, payable to Security Bank, for the deposit of federal unemployment tax for April, May, and June.

To determine

Prepare journal entry to record the given transaction.

Explanation

Payroll:

Payroll refers to the total amount that is required to be paid by the company to its employees during a week, month or other period. It is the financial record of the wages and bonus, net pay, salary and deductions of a company’s employees.

Prepare journal entry to record the given transaction.

DateAccount Title and explanationDebit ($)Credit ($)
June 13Employee federal income tax payable995.00 
 FICA-Social Security taxes payable 1,393.50 
 FICA-Medicare Taxes payable 325.90 
      Cash 2,714.40.
 (To record the issuance of check payable to Bank S for federal tax deposit.)  
    
June 30Sales salaries expense11,490.00 
 Office salaries expense 5,147.00 
      Employee’s  federal income tax payable 1,725.00
      FICA-Social Security taxes payable  1,031.49
      FICA-Medicare Taxes payable  241.24
      Salaries payable 13,639.27
 (To record the payroll register for June.)  
        
June 30Payroll  tax expense2,270.95 
 

     FICA-Social Security taxes payable

    ($16,637×6.2%)

 1,031.49
      FICA-Medicare Taxes payable ($16,637×6.2%) 241.24
 

     State unemployment tax payable    

    ($16,637×5

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