Textbook Problem

Payroll Accounting and Discussion of Labor Costs

Blitzen Marketing Research paid its weekly and monthly payroll on January 31. The following information is available about the payroll:

Blitzen will pay both the employer’s taxes and the taxes withheld on April 15.

Required:

1. Prepare the journal entries to record the payroll payment and the incurrence of the associated expenses and liabilities. ( Note: Round to nearest penny.)

2. What is the employees' gross pay? What amount does Blitzen pay in excess of gross pay as a result of taxes? ( Note: Provide both an absolute dollar amount and as a percentage of gross pay, rounding to two decimal places.)

3. How much is the employees' net pay as a percentage of total payroll related expenses? ( Note: Round answer to two decimal places.)

4. CONCEPTUAL CONNECTION If another employee can be hired for $60,000 per year, what would be the total cost of this employee to Blitzen?