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a. Cal Ruther, an employer, is subject to FICA taxes but exempt from FUTA and SUTA taxes. During the last quarter of the year, his employees earned monthly wages of $8,500, all of which is taxable. The amount of federal income taxes withheld each month is $1,040. Journalize the payment of wages, and record the pay- roll tax on November 29. JOURNAL

a. Cal Ruther, an employer, is subject to FICA taxes but exempt from FUTA and SUTA taxes. During the last quarter of the year, his employees earned monthly wages of $8,500, all of which is taxable. The amount of federal income taxes withheld each month is $1,040. Journalize the payment of wages, and record the pay- roll tax on November 29. JOURNAL

FINANCIAL ACCOUNTING
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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### Journalizing Payroll Tax Transactions **Instruction:** Prior to posting the November 29 payroll transaction, FICA Taxes Payable—OASDI, FICA Taxes Payable—HI, and Employees FIT Payable had zero balances. Ruther must pay the FICA taxes and income taxes withheld on the November 29 payroll. Journalize the electronic transfer of the payroll taxes on December 16. **Journal Format:** ``` JOURNAL ------------------------------------------------------------------------------- | DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ------------------------------------------------------------------------------- | 1 | | | | | ------------------------------------------------------------------------------- | 2 | | | | | ------------------------------------------------------------------------------- | 3 | | | | | ------------------------------------------------------------------------------- | 4 | | | | | ------------------------------------------------------------------------------- | 5 | | | | | ------------------------------------------------------------------------------- | 6 | | | | | ------------------------------------------------------------------------------- ``` ### Explanation of the Journal Entries: - **Date Column:** The first column is designated for the date of the transaction. For this exercise, the date would be December 16. - **Description Column:** This column documents the account names involved in the transaction. For this particular transaction, it should list the different payroll taxes being transferred. - **Post. Ref. Column:** This column is for the posting reference. Although it is not required in this particular scenario, it usually links to the ledger for further details. - **Debit and Credit Columns:** These columns will display the debit and credit amounts related to the payroll tax transfer. *Note: The exact amounts for debits and credits are not provided in the initial instructions and would need to be calculated based on the payroll data for November 29.* ### Information for Students: When you encounter a similar problem, remember to: 1. List the payroll accounts that need to be cleared. 2. Record the debit and credit amounts accurately to reflect the transfer. 3. Ensure the journal entry is balanced, with total debits equaling total credits. This is a typical exercise in accounting to ensure that payroll taxes are accurately recorded and transferred. Accurate journalizing helps maintain clean and precise financial records.
Transcribed Image Text:### Journalizing Payroll Tax Transactions **Instruction:** Prior to posting the November 29 payroll transaction, FICA Taxes Payable—OASDI, FICA Taxes Payable—HI, and Employees FIT Payable had zero balances. Ruther must pay the FICA taxes and income taxes withheld on the November 29 payroll. Journalize the electronic transfer of the payroll taxes on December 16. **Journal Format:** ``` JOURNAL ------------------------------------------------------------------------------- | DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ------------------------------------------------------------------------------- | 1 | | | | | ------------------------------------------------------------------------------- | 2 | | | | | ------------------------------------------------------------------------------- | 3 | | | | | ------------------------------------------------------------------------------- | 4 | | | | | ------------------------------------------------------------------------------- | 5 | | | | | ------------------------------------------------------------------------------- | 6 | | | | | ------------------------------------------------------------------------------- ``` ### Explanation of the Journal Entries: - **Date Column:** The first column is designated for the date of the transaction. For this exercise, the date would be December 16. - **Description Column:** This column documents the account names involved in the transaction. For this particular transaction, it should list the different payroll taxes being transferred. - **Post. Ref. Column:** This column is for the posting reference. Although it is not required in this particular scenario, it usually links to the ledger for further details. - **Debit and Credit Columns:** These columns will display the debit and credit amounts related to the payroll tax transfer. *Note: The exact amounts for debits and credits are not provided in the initial instructions and would need to be calculated based on the payroll data for November 29.* ### Information for Students: When you encounter a similar problem, remember to: 1. List the payroll accounts that need to be cleared. 2. Record the debit and credit amounts accurately to reflect the transfer. 3. Ensure the journal entry is balanced, with total debits equaling total credits. This is a typical exercise in accounting to ensure that payroll taxes are accurately recorded and transferred. Accurate journalizing helps maintain clean and precise financial records.
### Journalizing Payroll Transactions #### Scenario: Cal Ruther, an employer, is subject to FICA taxes but exempt from FUTA and SUTA taxes. During the last quarter of the year, his employees earned monthly wages of $8,500, all of which is taxable. The amount of federal income taxes withheld each month is $1,040. The journal entry is to be made on November 29 for the payment of wages and recording the payroll tax. #### Instructions: Journalize the payment of wages and record the payroll tax in a journal. #### Journal Format: Below is the sample format of a general journal used for accounting transactions. The journal includes columns for date, description, posting reference, debits, and credits. **Journal** | DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | |-------|-------------|------------|-------|--------| | 1 | | | | | | 2 | | | | | | 3 | | | | | | 4 | | | | | | 5 | | | | | | 6 | | | | | | 7 | | | | | | 8 | | | | | | 9 | | | | | | 10 | | | | | This journal helps in recording transactions systematically by listing all necessary details such as date, description of the transaction, potential posting reference, and the amounts debited and credited. Understanding the example provided and applying it helps in effectively managing and recording payroll transactions while ensuring compliance with tax regulations.
Transcribed Image Text:### Journalizing Payroll Transactions #### Scenario: Cal Ruther, an employer, is subject to FICA taxes but exempt from FUTA and SUTA taxes. During the last quarter of the year, his employees earned monthly wages of $8,500, all of which is taxable. The amount of federal income taxes withheld each month is $1,040. The journal entry is to be made on November 29 for the payment of wages and recording the payroll tax. #### Instructions: Journalize the payment of wages and record the payroll tax in a journal. #### Journal Format: Below is the sample format of a general journal used for accounting transactions. The journal includes columns for date, description, posting reference, debits, and credits. **Journal** | DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | |-------|-------------|------------|-------|--------| | 1 | | | | | | 2 | | | | | | 3 | | | | | | 4 | | | | | | 5 | | | | | | 6 | | | | | | 7 | | | | | | 8 | | | | | | 9 | | | | | | 10 | | | | | This journal helps in recording transactions systematically by listing all necessary details such as date, description of the transaction, potential posting reference, and the amounts debited and credited. Understanding the example provided and applying it helps in effectively managing and recording payroll transactions while ensuring compliance with tax regulations.
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