Corporate Financial Accounting
15th Edition
ISBN: 9781337398169
Author: Carl Warren, Jeff Jones
Publisher: Cengage Learning
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Question
Chapter 10, Problem 10.2BPR
1.
A.
To determine
Payroll: The total payment that a company is required to pay to its employee for the services received is called as payroll.
Payroll withholding deduction: The amounts which the employer withheld from employees’ gross pay to deduct taxes such as federal income tax, state income tax, local income tax, and social security tax are called payroll withholding deduction.
Employer payroll taxes: The taxes which the employer must pay to the employees with their salaries is called employer payroll taxes. Such taxes are not withheld from employees’ gross earnings but instead they are paid by employer.
To Journalize: The entry to record the payroll on December 30.
1.
A.
Expert Solution
Answer to Problem 10.2BPR
Prepare
| Date | Accounts and Explanation | Post Ref | Debit ($) | Credit ($) | |||
| December 30 | Sales Salaries Expense | 625,000 | |||||
| Warehouse Salaries Expense | 240,000 | ||||||
| Office salaries Expense | 320,000 | ||||||
| Social Security Taxes Payable (1) | 71,100 | ||||||
| Medicare Taxes Payable (2) | 17,775 | ||||||
| Employees Income Taxes Payable | 232,260 | ||||||
| Bond Deductions Payable | 35,500 | ||||||
| Group Insurance Payable | 53,325 | ||||||
| Salaries Payable | 775,040 | ||||||
| (To record salaries expense and payroll withholdings) | |||||||
Table (1)
Explanation of Solution
Working notes:
Calculate the amount of social security taxes payable as below:
Calculate the amount of Medicare taxes payable as below:
- Sales salaries expense is an expense and it decreases equity value. So, debit it by $625,000.
- Warehouse salaries expense is an expense and it decreases equity value. So, debit it by $240,000.
- Office salaries expense is an expense and it decreases equity value. So, debit it by $320,000.
- Social security taxes payable is a liability and it is increased. So, credit it by $71,100.
- Medicare taxes payable is a liability and it is increased. So, credit it by $17,775.
- Employee income taxes payable is a liability and it is increased. So, credit it by $232,260.
- Bond Deductions payable is a liability and it is increased. So, credit it by $35,500.
- Group insurance payable is a liability and it is increased. So, credit it by $53,325.
- Salaries payable is a liability and it is increased. So, credit it by $775,040.
B.
To determine
To Journalize: The employer’s payroll taxes expense on December 30.
B.
Expert Solution
Answer to Problem 10.2BPR
Prepare journal entry to record employer’s payroll taxes expense on December 30.
| Date | Accounts and Explanation | Post Ref | Debit ($) | Credit ($) | |||
| December | 30 | Payroll Tax Expense | 90,735 | ||||
| Social Security Taxes Payable (1) | 71,100 | ||||||
| Medicare Taxes Payable (2) | 17,775 | ||||||
|
Federal |
240 | ||||||
| State Unemployment Taxes Payable (4) | 1,620 | ||||||
| (To record employer’s payroll taxes expense) | |||||||
Table (2)
Explanation of Solution
Calculate the amount of Federal unemployment taxes as below:
Calculate the amount of State unemployment taxes as below:
- Payroll tax expense is an expense and it decreases equity value. So, debit it by $90,675.
- Social security taxes payable is a liability and it is increased. So, credit it by $71,100.
- Medicare taxes payable is a liability and it is increased. So, credit it by $17,775.
- Federal unemployment taxes payable is a liability and it is increased. So, credit it by $240.
- State unemployment taxes payable is a liability and it is increased. So, credit it by $1,620.
2.
A.
To determine
To Journalize: The entry to record the payroll on December 30.
2.
A.
Expert Solution
Answer to Problem 10.2BPR
Prepare journal entry to record the payroll on December 30.
| Date | Accounts and Explanation | Post Ref | Debit ($) | Credit ($) | |||
| December 30 | Sales Salaries Expense | 625,000 | |||||
| Warehouse Salaries Expense | 240,000 | ||||||
| Office salaries Expense | 320,000 | ||||||
| Social Security Taxes Payable (5) | 71,100 | ||||||
| Medicare Taxes Payable (6) | 17,775 | ||||||
| Employees Income Taxes Payable | 232,260 | ||||||
| Bond Deductions Payable | 35,500 | ||||||
| Group Insurance Payable | 53,325 | ||||||
| Salaries Payable | 775,040 | ||||||
| (To record salaries expense and payroll withholdings) | |||||||
Table (3)
Explanation of Solution
Working notes:
Calculate the amount of social security taxes payable as below:
Calculate the amount of Medicare taxes payable as below:
- Sales salaries expense is an expense and it decreases equity value. So, debit it by $625,000.
- Warehouse salaries expense is an expense and it decreases equity value. So, debit it by $240,000.
- Office salaries expense is an expense and it decreases equity value. So, debit it by $320,000.
- Social security taxes payable is a liability and it is increased. So, credit it by $71,100.
- Medicare taxes payable is a liability and it is increased. So, credit it by $17,775.
- Employee income taxes payable is a liability and it is increased. So, credit it by $232,260.
- Bond Deductions payable is a liability and it is increased. So, credit it by $35,500.
- Group insurance payable is a liability and it is increased. So, credit it by $53,325.
- Salaries payable is a liability and it is increased. So, credit it by $775,040.
B.
To determine
To Journalize: The employer’s payroll taxes expense on January 5.
B.
Expert Solution
Answer to Problem 10.2BPR
Prepare journal entry to record employer’s payroll taxes expense on January 5.
| Date | Accounts and Explanation | Post Ref | Debit ($) | Credit ($) | |||
| January | 5 | Payroll Tax Expense | 162,345 | ||||
| Social Security Taxes Payable (5) | 71,100 | ||||||
| Medicare Taxes Payable (6) | 17,775 | ||||||
| Federal Unemployment Taxes Payable (7) | 9,480 | ||||||
| State Unemployment Taxes Payable (8) | 63,990 | ||||||
| (To record employer’s payroll taxes expense) | |||||||
Table (4)
Explanation of Solution
Calculate the amount of Federal unemployment taxes as below:
Calculate the amount of State unemployment taxes as below:
- Payroll tax expense is an expense and it decreases equity value. So, debit it by $159,975.
- Social security taxes payable is a liability and it is increased. So, credit it by $71,100.
- Medicare taxes payable is a liability and it is increased. So, credit it by $17,775.
- Federal unemployment taxes payable is a liability and it is increased. So, credit it by $9,480.
- State unemployment taxes payable is a liability and it is increased. So, credit it by $63,990.
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Chapter 10 Solutions
Corporate Financial Accounting
Ch. 10 - Does a discounted note payable provide credit...Ch. 10 - Employees are subject to taxes withheld from their...Ch. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - To match revenues and expenses properly, should...Ch. 10 - Prob. 7DQCh. 10 - Installment notes require equal periodic payments....Ch. 10 - When should the liability associated with a...Ch. 10 - Prob. 10DQ
Ch. 10 - Proceeds from notes payable On January 26, Nyree...Ch. 10 - Prob. 10.2BECh. 10 - Journalize period payroll The payroll register of...Ch. 10 - Prob. 10.4BECh. 10 - Prob. 10.5BECh. 10 - Journalizing installment notes On the first day of...Ch. 10 - Prob. 10.7BECh. 10 - Quick ratio Adieu Company reported the following...Ch. 10 - Current liabilities Bon Nebo Co. sold 30,000...Ch. 10 - Entries for notes payable Bennett Enterprises...Ch. 10 - Evaluating alternative notes A borrower has two...Ch. 10 - Entries for notes payable A business issued a...Ch. 10 - Entries for discounted note payable A business...Ch. 10 - Fixed asset purchases with note On June 30,...Ch. 10 - Prob. 10.7EXCh. 10 - Calculate payroll An employee earns 30 per hour...Ch. 10 - Prob. 10.9EXCh. 10 - Summary payroll data In the following summary of...Ch. 10 - Prob. 10.11EXCh. 10 - Payroll entries The payroll register for D. Salah...Ch. 10 - Payroll entries Widmer Company had gross wages of...Ch. 10 - Prob. 10.14EXCh. 10 - Prob. 10.15EXCh. 10 - Accrued vacation pay A business provides its...Ch. 10 - Prob. 10.17EXCh. 10 - Prob. 10.18EXCh. 10 - Entries for installment note transactions On the...Ch. 10 - Entries for installment note transactions On...Ch. 10 - Entries for installment note transactions On...Ch. 10 - Accrued product warranty Fosters Manufacturing Co....Ch. 10 - Prob. 10.23EXCh. 10 - Prob. 10.24EXCh. 10 - Liability transactions The following items were...Ch. 10 - Entries for payroll and payroll taxes The...Ch. 10 - Wage and tax statement data on employer FICA tax...Ch. 10 - Prob. 10.4APRCh. 10 - Payroll accounts and year-end entries The...Ch. 10 - Prob. 10.1BPRCh. 10 - Prob. 10.2BPRCh. 10 - Wage and tax statement data and employer FICA tax...Ch. 10 - Prob. 10.4BPRCh. 10 - Payroll accounts and year-end entries The...Ch. 10 - Prob. 3COPCh. 10 - Analyze and compare Amazon.com to Best Buy...Ch. 10 - Prob. 10.2MADCh. 10 - Prob. 10.3MADCh. 10 - Analyze and compare Neiman Marcus and Kohls Neiman...Ch. 10 - Analyze and compare Cabelas and Dicks Sporting...Ch. 10 - Ethics in Action Tonya Latirno is a staff...Ch. 10 - Prob. 10.4TIFCh. 10 - Prob. 10.5TIF
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