ording payroll transactions, the following accounts are used: Cash Wages Payable FICA Tax Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Employees Income Tax Payable Payroll Administrative Salaries Miscellaneous Administrative Expense Sales Salaries
P3-10 Summary of payroll procedures Megerle Custom Cabinet Co. uses the
Cash
Wages Payable
FICA Tax Payable
Federal
State Unemployment Tax Payable
Employees Income Tax Payable
Payroll
Administrative Salaries
Miscellaneous Administrative Expense
Sales Salaries
Miscellaneous Selling Expense
Factory Overhead
Work in Process
Factory employees are paid weekly, while all other employees are paid semimonthly on the fifteenth and the last day of each month. All salaries and wages are subject to all taxes. The income tax withheld amounts to 10% of gross wages.
Following is a narrative of transactions completed during January:
Jan.7 Recorded total earnings of factory employees amounting to $68,200, less deductions for employees’ income taxes and FICA taxes.
7 Issued check for payment of the payroll.
14 Recorded total earnings of factory employees amounting to $66,300, less deductions for employees’ income taxes and FICA taxes.
14 Issued check for payment of the payroll.
15 Recorded administrative salaries, $10,000, and sales salaries, $18,000, less deductions for employees’ income taxes and FICA taxes.
15 Issued check for payment of the salaries.
21 Recorded total earnings of factory employees amounting to $72,500, less deductions for employees’ income taxes and FICA taxes.
21 Issued check for payment of the payroll.
28 Recorded total earnings of factory employees amounting to $74,200, less deductions for employees’ income taxes and FICA taxes.
28 Issued check for payment of the payroll.
31 Recorded administrative salaries, $10,000, and sales salaries, $18,000, less deductions for employees’ income taxes and FICA taxes.
31 Issued check for payment of the salaries.
31 The following wages and salaries were earned or accrued during January:
Direct labor .....................................................................................$302,500
Indirect labor ...................................................................................22,500
Administrative salaries.....................................................................20,000
Sales salaries...................................................................................36,000
Megerle Custom Cabinet Co. used the following form to compute the amount of payroll taxes incurred:
Items Taxable FICA Federal State Total
earnings tax Unemployment Unemployment Payroll
tax tax taxes
Factory wages.......
Administrative salaries....
Sales salaries............. _________ ________ __________ ___________ __________
Total............................ _________ _________ _________ __________ __________
1. Prepare the journal entries to record the foregoing transactions, including the distribution of payroll costs.
2. Complete the previous form to show the payroll taxes imposed on the employer for January.
3. Prepare the
4. Assume that the factory employees worked on January 29, 30, and 31. What was the amount of accrued wages on January 31? (Hint: Assume that there were no accrued wages at the beginning of the month.)
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