Answered: (a) Prepare a summary journal entry at…

(a) Prepare a summary journal entry at December 31 for the full year's payroll. (b) Journalize the adjusting entry at December 31 to record the employer's payroll taxes.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Payroll Entries

Payroll is a comprehensive record of employees that are paid by the company. Payroll classifies employees into various categories according to their function and pays scale (basic wage, allowance, income tax, other taxes, employee loans, etc.). Payroll processes form the bedrock of every organization as it contains sensitive information on the ‘wage and paycheck’ portion of the company’s strength—its employees. The organization needs to keep a track of the employees currently on the payroll, the net payout for the company, the record of transactions related to the employees including deductions and payroll taxes to identify the liability and its effect on the balance sheet (and other financial statements). Payroll records also include qualitative factors such as the conduct of the employee.

Question

100%

For the year ended December 31, 2022, Oriole Electrical Repair Company reports the following summary payroll data.
Gross earnings:
Administrative salaries
Electricians' wages
Deductions:
Total
FICA taxes
Federal income taxes withheld
State income taxes withheld (3%)
V
United Fund contributions payable
Health Insurance premiums
Total
(a)
(b)
Oriole's payroll taxes are Social Security tax 6.2%, Medicare tax 1.45%, state unemployment 2.5% (due to a stable employment
record), and 0.6% federal unemployment. Gross earnings subject to Social Security taxes of 6.2% total $497,000, and gross earnings
subject to unemployment taxes total $145,000. No employee exceeds the $132,900 limit related to FICA taxes.
(a) Prepare a summary journal entry at December 31 for the full year's payroll.
(b) Journalize the adjusting entry at December 31 to record the employer's payroll taxes.
No. Account Titles and Explanation
Salaries and Wages Expense
FICA Taxes Payable
(Round answers to 0 decimal places, eg. 125. Credit account titles are automatically Indented when amount is entered. Do not Indent manually)
Federal Income Taxes Payable
State Income Taxes Payable
United Fund Contributions Payable
$204,000
Health Insurance Payable
376,000
$580,000
Salaries and Wages Payable
Payroll Tax Expense
FICA Taxes Payable
$39,224
165,000
17,400
18,500
$268,106
27,982
State Unemployment Taxes Payable
Federal Unemployment Taxes Payable
Debit
580,000
Credit
STE
39,224
165,000
17,400
27,982
18.500
311.894
39,224
3,625
870

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