1.
Pass
1.
Explanation of Solution
Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.
Payroll Account: A payroll account is a separate checking account for the company to record the payment of the payroll checks to their employees. A payroll account includes the money a company pays to their employees like salaries, wages, bonuses and withheld taxes.
Pass journal entry to record the foregoing transactions.
Date | Description | Post Ref | Debit ($) | Credit($) |
January 7 | Payroll | 68,200 | ||
Employees income tax payable | 6,820 | |||
FICA tax payable | 5,456 | |||
Wages payable | 55,924 | |||
(To record the payroll) | ||||
January 7 | Wages payable | 55,924 | ||
Cash | 55,924 | |||
(To record payment of payroll) | ||||
January 14 | Payroll | 66,300 | ||
Employees income tax payable | 6,630 | |||
FICA tax payable | 5,304 | |||
Wages payable | 54,366 | |||
(To record the payroll) | ||||
January 14 | Wages payable | 54,366 | ||
Cash | 54,366 | |||
(To record payment of payroll) | ||||
January 15 | Payroll | 28,000 | ||
Employees income tax payable | 2,800 | |||
FICA tax payable | 2,240 | |||
Wages payable | 22,960 | |||
(To record the payroll) | ||||
January 15 | Wages payable | 22,960 | ||
Cash | 22,960 | |||
(To record payment of payroll) | ||||
January 21 | Payroll | 72,500 | ||
Employees income tax payable | 7,250 | |||
FICA tax payable | 5,800 | |||
Wages payable | 59,450 | |||
(To record the payroll) | ||||
January 21 | Wages payable | 59,450 | ||
Cash | 59,450 | |||
(To record payment of payroll) | ||||
January 28 | Payroll | 74,200 | ||
Employees income tax payable | 7,420 | |||
FICA tax payable | 5,936 | |||
Wages payable | 60,844 | |||
(To record the payroll) | ||||
January 28 | Wages payable | 60,844 | ||
Cash | 60,844 | |||
(To record payment of payroll) | ||||
January 31 | Payroll | 28,000 | ||
Employees income tax payable | 2,800 | |||
FICA tax payable | 2,240 | |||
Wages payable | 22,960 | |||
(To record the payroll) | ||||
January 31 | Wages payable | 22,960 | ||
Cash | 22,960 | |||
(To record payment of payroll) | ||||
January 31 | Work in process | 302,500 | ||
Factory | 22,500 | |||
Administrative salaries | 20,000 | |||
Sales salaries | 36,000 | |||
Payroll | 381,000 | |||
(To record wages and salaries) |
Table (1)
2.
Compute the payroll taxes.
2.
Explanation of Solution
Compute the payroll taxes.
Items | Taxable Earnings | FICA Tax 8% | Federal | State Unemployment Tax 1% | Total Payroll Taxes |
Factory wages | $325,000 | $26,000 | $3,250 | $13,000 | $42,250 |
Administrative salaries | $20,000 | $1,600 | $200 | $800 | $2,600 |
Sales salaries | $36,000 | $2,880 | $360 | $1,440 | $4,680 |
$381,000 | $30,480 | $3,810 | $15,240 | $49,530 |
Table (2)
3.
Record journal entry to distribute payroll taxes.
3.
Explanation of Solution
Record journal entry to distribute payroll taxes.
Date | Description | Post Ref | Debit ($) | Credit($) |
January 31 | Factory overhead | 42,250 | ||
Miscellaneous administrative expense | 2,600 | |||
Miscellaneous selling expense | 4,680 | |||
FICA tax payable | 30,480 | |||
Federal unemployment tax payable | 3,810 | |||
State unemployment tax payable | 15,240 | |||
(To record the distributed payroll taxes) |
Table (3)
4.
Compute the amount of accrued wages.
4.
Explanation of Solution
Compute the amount of accrued wages.
Particulars | Amount ($) |
Direct labor | 302,500 |
Indirect labor | 22,500 |
Total | 325,000 |
Less: Wages paid during month | 281,200 |
Accrued wages, January 31st | 43,800 |
Table (4)
Therefore, the amount of accrued wages is $43,800.
Working Note: Calculate the wages during the month.
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Chapter 3 Solutions
Principles of Cost Accounting
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