FINANCIAL ACCOUNTING ACCT 2301 >IC<
FINANCIAL ACCOUNTING ACCT 2301 >IC<
5th Edition
ISBN: 9781259690457
Author: Wild
Publisher: MCGRAW-HILL CUSTOM PUBLISHING
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Chapter 9, Problem 17E

a.

To determine

Complete the payroll register by filling in all cells for the pay period ended August 31.

a.

Expert Solution
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Explanation of Solution

Payroll tax:

Payroll tax refers to the tax that are equally contributed by employees and 
employer based on the salary and wages of an employee. Payroll tax includes taxes 
like federal tax, local income tax, state tax, social security tax and federal and 
state unemployment tax.

FINANCIAL ACCOUNTING ACCT 2301 >IC<, Chapter 9, Problem 17E

(Table 1)

b.

To determine

Prepare journal entry to record the accrued biweekly payroll and related liabilities for deductions.

b.

Expert Solution
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Explanation of Solution

DateAccount Titles and Explanation

Debit

(Amount in $)

Credit

(Amount in $)

August 31 Salaries expense10,020.00 
      FICA - Social security taxes payable 298.84
      FICA- Medicare taxes payable 145.29
 

     Federal income taxes payable-            

     Employee           

 2,380.00
 

     State income taxes payable-

     Employee  

 388.00
      Employee benefits plan payable 501.00
      Salaries payable 6306.87
 (To record the payroll for period)  

(Table 2)

  • Salaries expense is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the salaries expense by $10,020.00
  • FICA- Social security taxes payable is a liability and there is an increase in the value of liability. Hence, credit the FICA- social security taxes payable by $298.84.
  • FICA- Medicare taxes payable is a liability and there is an increase in the value of liability. Hence, credit the FICA- Medicare taxes payable by $145.29
  • Federal income taxes payable- employee is a liability and there is an increase in the value of liability. Hence, credit the federal income taxes payable by $2,380.00.
  • State income taxes payable- employee is a liability and there is an increase in the value of liability. Hence, credit the state income taxes payable by $388.00.
  • Employee benefits plan payable is a liability and there is an increase in the value of liability. Hence, credit the employee benefits plan payable by $501.00.
  • Salaries payable is a liability and there is an increase in the value of liability. Hence, credit the salaries payable by $6,306.87.

c.

To determine

Prepare journal entry to record the employer’s cash payment of the net payroll of requirement b.

c.

Expert Solution
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Explanation of Solution

DateAccount Titles and Explanation

Debit

(Amount in $)

Credit

(Amount in $)

August 31 Salaries payable6,306.87 
      Cash 6306.87
 (To record the payment of  payroll)  

(Table 3)

  • Salaries payable is a liability and there is a decrease in the value of liability. Hence, debit the salaries payable by $6,306.87.
  • Cash is an asset and there is a decrease the value of an asset. Hence, credit the cash by $6,306.87.

d.

To determine

Prepare journal entry to record the employer’s payroll taxes including the contribution to the benefits plan.

d.

Expert Solution
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Explanation of Solution

DateAccount Titles and Explanation

Debit

(Amount in $)

Credit

(Amount in $)

August 31 Payroll tax expense530.53 
      FICA - Social security taxes payable 298.84
      FICA- Medicare taxes payable 145.29
      Federal unemployment taxes payable 8.64
      State unemployment taxes payable 77.76
 (To record the payroll taxes)  

(Table 4)

  • Payroll tax expense is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the payroll tax expense by $530.53.
  • FICA- Social security taxes payable is a liability and there is an increase in the value of liability. Hence, credit the FICA- social security taxes payable by $298.84.
  • FICA- Medicare taxes payable is a liability and there is an increase in the value of liability. Hence, credit the FICA- Medicare taxes payable by $145.29
  • Federal unemployment taxes payable is a liability and there is an increase in the value of liability. Hence, credit the federal unemployment taxes payable by $8.64.
  • State unemployment taxes payable is a liability and there is an increase in the value of liability. Hence, credit the state unemployment taxes payable by $77.76.
DateAccount Titles and Explanation

Debit

(Amount in $)

Credit

(Amount in $)

August 31 Employee benefits expense1,002.00 
      Employee benefits plan payable 1,002.00
 (To record the cost  of  employee benefits)  

(Table 5)

  • Employee benefits expense is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the employee benefits expense by $1,002.00.
  • Employee benefits plan payable is a liability and there is an increase in the value of liability. Hence, credit the employee benefits plan payable by $1,002.00.

e.

To determine

Prepare journal entry to record to pay all liabilities (except for the net payroll in requirement c) for this biweekly period.

e.

Expert Solution
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Explanation of Solution

DateAccount Titles and Explanation

Debit

(Amount in $)

Credit

(Amount in $)

August 31FICA - Social security taxes payable597.68 
 FICA- Medicare taxes payable290.58 
 Federal income taxes payable- employee                     2,380.00 
 State income taxes payable- employee388.00 
 Employee benefits plan payable1,503.00 
 Federal unemployment taxes payable8.64 
 State unemployment taxes payable77.76 
      Cash 5,245.66
 (To record payment of FICA, income taxes, SUTA, FUTA, and benefit plan contributions)  

(Table 6)

  • FICA- Social security taxes payable is a liability and there is a decrease in the value of liability. Hence, debit the FICA- social security taxes payable by $597.68.
  • FICA- Medicare taxes payable is a liability and there is a decrease in the value of liability. Hence, debit the FICA- Medicare taxes payable by $290.58.
  • Federal income taxes payable- employee is a liability and there is a decrease in the value of liability. Hence, debit the federal income taxes payable by $2,380.00.
  • State income taxes payable- employee is a liability and there is a decrease in the value of liability. Hence, debit the state income taxes payable by $388.00.
  • Employee benefits plan payable is a liability and there is a decrease in the value of liability. Hence, debit the employee benefits plan payable by $1,503.00
  • Federal unemployment taxes payable is a liability and there is a decrease in the value of liability. Hence, debit the federal unemployment taxes payable by $8.64.
  • State unemployment taxes payable is a liability and there is a decrease in the value of liability. Hence, debit the state unemployment taxes payable by $77.76.
  • Cash is an asset and there is a decrease the value of an asset. Hence, credit the cash by $5,245.66.

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What Is And How To Calculate FICA Taxes Explained, Social Security Taxes And Medicare Taxes; Author: Whats Up Dude;https://www.youtube.com/watch?v=fzK3KDDYCQw;License: Standard Youtube License