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College Accounting (Book Only): A ...

13th Edition
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ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

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

Grande Company has the following balances in its general ledger as of March 1 of this year:

  1. a. FICA Taxes Payable (liability for February), $9,180.00 (total for employee and employer). The FICA Social Security Tax Payable is $7,440.00, and the FICA Medicare Tax Payable is $1,740.00.
  2. b. Employees’ Federal Income Tax Payable (liability for February), $9,000.00.
  3. c. State Unemployment Tax Payable (liability for January and February), $3,442.50.
  4. d. Federal Unemployment Tax Payable (liability for January and February), $510.00.

The company completed the following transactions involving the payroll during March and April:

Mar. 12    Issued check for $18,180.00, payable to Coast Bank, for the monthly deposit of February FICA taxes and employees’ federal income tax withheld.

31    Recorded the payroll entry in the general journal from the payroll register for March. The payroll register had the following column totals:

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31    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. Federal unemployment tax is 0.6 percent. At this time, all employees’ earnings are taxable for FICA and $1,000 of the earnings are taxable for unemployment taxes.

31    Issued check for $46,128.45 from Cash—Payroll Bank Account to pay salaries for the month.

Apr. 14    Issued check for $18,069.70, payable to Coast Bank, for the monthly deposit of March FICA taxes (employee and employer) and employees’ federal income tax withheld.

30    Issued check for $3,496.50, payable to State Department of Revenue, for state unemployment tax for January, February, and March. The check was accompanied by the quarterly tax return.

30    Issued check for $516.00, payable to Coast Bank, for the deposit of federal unemployment tax for the months of January, February, and March.

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 ($)Credit ($)
March 12Employee federal income tax payable9,000.00 
 FICA-Social Security taxes payable 7,440.00 
 FICA-Medicare Taxes payable 1,740.00 
      Cash 18,180.00
 (To record the issuance of check payable to Bank C for federal tax deposit.)  
    
March 31Sales salaries expense47,654.00 
 Office salaries expense 11,982.00 
      Employee’s  federal income tax payable 8,945.40
      FICA-Social Security taxes payable  3,697.43
      FICA-Medicare Taxes payable  864.72
      Salaries payable 46,128.45
 (To record the payroll register for March.)  
        
March 31Payroll  tax expense4,622.15 
 

     FICA-Social Security taxes payable

    ($59,636×6.2%)

 3,697.43
 

     FICA-Medicare Taxes payable

    ($59,636×1.45%)

 864.72
 

     State unemployment tax payable    

    ($1,000×5

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