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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Recording payroll and payroll taxes

The following information about the payroll for the week ended October 4 was obtained from the records of Simkins Mining Co.:

Instructions
Illustrate the effect on the accounts and financial statements of recording the October 4 payroll.

To determine

Concept Introduction:

Payroll means that amount of money that employer pays to the employees against the services provided by the employees to the employers. The payroll includes salaries of the employees.

Payroll tax is the amount of tax levied on the payroll paid. As per FICA (Federal Insurance Contribution Act), from the payment of payroll by the employers to employees, employers have to withhold a percentile part from that payment.

To State:

The effect on the accounts and financial statements for recording payroll taxes.

Explanation

The net salary payable is as follows:

  Net Salaries payable=Total salaries payable{Income tax payable+Bonds deduction payable+Group insuarance payable+FICA tax payable}=$90,000{$17,000+$2,000+$6,000+$6,750}=$58,250

Income Statement

    Particulars  ($)Amount
      ($)
    Salaries and wages  ($90,000)

Balance Sheet

      ($)

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