Financial and Managerial Accounting (Looseleaf) (Custom Package)
Financial and Managerial Accounting (Looseleaf) (Custom Package)
6th Edition
ISBN: 9781259754883
Author: Wild
Publisher: MCG
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Chapter 9, Problem 17E

a.

To determine

To prepare:

The payroll register by filling in the empty cells.

a.

Expert Solution
Check Mark

Explanation of Solution

Prepare the payroll register as shown below.

Financial and Managerial Accounting (Looseleaf) (Custom Package), Chapter 9, Problem 17E

Table 1

Working notes:

1. Calculation of FUTA of A.

FUTAofA=0.6%offirst$7,000=0.6%×$200=$1.2

2. Calculation of FUTA of Z.

FUTAofZ=0.6%offirst$7,000=0.6%×$500=$3

3. Calculation of FUTA of G.

FUTAofG=0.6%offirst$7,000=0.6%×$2000=$12

4. Calculation of SUTA of A.

SUTAofA=5.4%offirst$7,000=5.4%×$200=$10.8

5. Calculation of SUTA of Z.

SUTAofZ=5.4%offirst$7,000=5.4%×$500=$27

6. Calculation of SUTA of G.

SUTAofG=5.4%offirst$7,000=5.4%×$2000=$108

7. Calculation of security tax of K.

SocialsecuritytaxofK=6.2%offirst$118,500=6.2%×$1800=$111.6

8. Calculation of security tax of A.

SocialsecuritytaxofA=6.2%offirst$118,500=6.2%×$500=$31

9. Calculation of security tax of N.

SocialsecuritytaxofN=6.2%offirst$118,500=6.2%×$920=$57.04

10. Calculation of security tax of Z.

SocialsecuritytaxofZ=6.2%offirst$118,500=6.2%×$860=$53.40

11. Calculation of security tax of G.

SocialsecuritytaxofG=6.2%offirst$118,500=6.2%×$740=$46

12. Calculation of Medicare tax of K.

MedicaretaxofK=1.45%ofgrosspay=1.45%×$7,000=$101.5

13. Calculation of Medicare tax of A.

MedicaretaxofA=1.45%ofgrosspay=1.45%×$500=$7.25

14. Calculation of Medicare tax of N.

MedicaretaxofN=1.45%ofgrosspay=1.45%×$920=$13.34

15. Calculation of Medicare tax of Z.

MedicaretaxofZ=1.45%ofgrosspay=1.45%×$860=$12.47

16. Calculation of Medicare tax of G.

MedicaretaxofG=1.45%ofgrosspay=1.45%×$740=$10.73

17. Calculation of employee benefit of K.

EmployeebenefitofK=5%×GrossPay=5%×$7,000=$350

18. Calculation of employee benefit of A.

EmployeebenefitofA=5%×GrossPay=5%×$500=$25

19. Calculation of employee benefit of N.

EmployeebenefitofN=5%×GrossPay=5%×$920=$46

20. Calculation of employee benefit of Z.

EmployeebenefitofZ=5%×GrossPay=5%×$860=$43

21. Calculation of employee benefit of G.

EmployeebenefitofG=5%×GrossPay=5%×$740=$37

22. Calculation of net pay of K.

NetpayofK=[GrosspayFITSITSocialsecuritytaxMedicaretaxBenefitofemployee]=$7000$2000$300$111.6$101.5$350=$4136.9

23. Calculation of net pay of A.

NetpayofA=[GrosspayFITSITSocialsecuritytaxMedicaretaxBenefitofemployee]=$500$80$20$31$7.25$25=$336.75

24. Calculation of net pay of N.

NetpayofN=[GrosspayFITSITSocialsecuritytaxMedicaretaxBenefitofemployee]=$920$110$25$57.04$13.34$46=$668.62

25. Calculation of net pay of Z.

NetpayofZ=[GrosspayFITSITSocialsecuritytaxMedicaretaxBenefitofemployee]=$860$100$22$53.40$13.34$92=$579.26

26. Calculation of net pay of G.

NetpayofG=[GrosspayFITSITSocialsecuritytaxMedicaretaxBenefitofemployee]=$740$90$21$46$10.73$37=$535.27

b.

To determine

To prepare:

The journal entry for accrued biweekly payroll.

b.

Expert Solution
Check Mark

Answer to Problem 17E

Prepare the journal entry for accrued biweekly payroll as shown below.

Date Particulars L/F Debit
($)
Credit
($)
Aug 31 Salaries expense   10,020  
  FICA - Social security taxes payable     299.04
  FICA - Medicare taxes payable     145.29
  Employee federal taxes payable     2,380
  Employee state taxes payable     388
  Employee benefits plan payable     501
  Salaries payable     6306.67
  (To record the payroll for August)      

Table 2

Explanation of Solution

• Salaries expense is an expense account for a company. Since the balance of this account increases, it is debited.

• FICA social security taxes payable is a liability to a company. Its balance increases, so it is credited.

• FICA Medicare taxes payable is a liability to a company. Its balance increases, so it is credited.

• Employee federal taxes payable is a liability to a company. Its balance increases, so it is credited.

• Employee state taxes payable is a liability to a company. Its balance increases, so it is credited.

• Salaries payable is a liability to a company. Its balance increases, so it is credited.

c.

To determine

To prepare:

The journal entry to record employer’s cash payment of the net payroll

c.

Expert Solution
Check Mark

Answer to Problem 17E

Prepare the journal entry to record employer’s cash payment of the net payroll as shown below.

Date Particulars L/F Debit ($) Credit ($)
Aug 31 Salaries payable   6306.67  
  Cash     6306.67
  (To record the payment for August)      

Table 3

Explanation of Solution

• Salaries payable is a liability to company. Its balance decreases, so it is debited.

• Cash is an asset account. Since the company is paying salaries, cash is reducing. Hence, cash is credited.

d.

To determine

To prepare:

The journal entry to record employer’s payroll taxes.

d.

Expert Solution
Check Mark

Answer to Problem 17E

Prepare the journal entry to record employer’s payroll taxes as shown below.

Date Particulars L/F Debit
($)
Credit
($)
Aug31 Payroll taxes expense   3212.33  
  Employee benefit plan expenses   1,002  
  Employee benefit plan payable     1,002
  FICA - Social security taxes payable     299.04
  FICA - Medicare taxes payable     145.29
  Employee federal taxes payable     2,380
  Employee state taxes payable     388
  (To record the employer’s payroll taxes)      

Table 4

Explanation of Solution

• Payroll taxes are an expense account for a company. Since the balance of this account increases, it is debited.

• Employee benefit plan is an expense account for a company. Since the balance of this account increases, it is debited.

• Employee benefit plan is a liability to a company. Its balance increases, so it is credited.

• FICA social security taxes payable is a liability to a company. Its balance increases, so it is credited.

• FICA Medicare taxes payable is a liability to a company. Its balance increases, so it is credited.

• Employee federal taxes payable is a liability to a company. Its balance increases, so it is credited.

• Employee state taxes payable is a liability to a company. Its balance increases, so it is credited.

e.

To determine

To prepare:

The journal entry to pay all liabilities.

e.

Expert Solution
Check Mark

Answer to Problem 17E

Prepare the journal entry to pay all liabilities as shown below.

Date Particulars L/F Debit ($) Credit ($)
Aug 31 FICA - Social security taxes payable   598.08  
  FICA - Medicare taxes payable   290.58  
  Employee federal taxes payable   2,380  
  Employee state taxes payable   388  
  Employee benefits plan payable   1,503  
  FUTA payable   16.2  
  SUTA payable   145.8  
  Cash     5321.66
  (To record the payment of all liabilities)      

Table 5

Explanation of Solution

• FICA Social security taxes payable is a liability to a company. Its balance decreases, so it is debited.

• FICA Medicare taxes payable is a liability to a company. Its balance decreases, so it is debited.

• Employee federal taxes payable is a liability to a company. Its balance decreases, so it is debited.

• Employee state taxes payable is a liability to a company. Its balance decreases, so it is debited.

• Employee benefit plan is a liability to a company. Its balance decreases, so it is debited.

• FUTA payable is a liability to a company. Its balance decreases, so it is debited.

• SUTA payable is a liability to company. Its balance decreases, so it is debited.

• Cash is an asset account. Since company is paying salaries, its liability decreases. Hence, cash is credited.

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Chapter 9 Solutions

Financial and Managerial Accounting (Looseleaf) (Custom Package)

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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