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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

PAYROLL REGISTER AND PAYROLL JOURNAL ENTRY Karen Jolly operates a bakery called Karen’s Cupcakes. She has five employees, all of whom are paid on a weekly basis. Karen’s Cupcakes uses a payroll register, individual employee earnings records, and a general journal.

Karen’s Cupcakes uses a weekly federal income tax withholding table like the one in Figure 8-4 on pages 288 and 289. The payroll data for each employee for the week ended February 15, 20--, are given below. Employees are paid 1½ times the regular rate for working over 40 hours a week.

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Social Security tax is withheld from the first $128,400 of earnings at the rate of 6.2%. Medicare tax is withheld at the rate of 1.45%, and city earnings tax at the rate of 1%, both applied to gross pay. Hastings and Smith have $35 withheld and Nitobe and Tarshis have $15 withheld for health insurance. Nitobe and Tarshis have $25 withheld to be invested in the bakers’ credit union. Hastings has $18.75 withheld and Smith has $43.75 withheld under a savings bond purchase plan.

Karen’s Cupcakes’ payroll is met by drawing checks on its regular bank account. The checks were issued in sequence, beginning with No. 365.

REQUIRED

1. Prepare a payroll register for Karen’s Cupcakes for the week ended February 15, 20--. (In the Taxable Earnings/Unemployment Compensation column, enter the same amounts as in the Social Security column.) Total the amount columns, verify the totals, and rule with single and double lines.

2. Assuming that the wages for the week ended February 15 were paid on February 17, prepare the journal entry for the payment of this payroll.

1.

To determine

Prepare a payroll register for Cupcakes K for the week ended February 15, 20--.

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 a payroll register for Cupcakes K for the week ended February 15, 20--.

2.

To determine

Prepare the journal entry for the payment of the payroll.

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