Recording Payroll and Payroll Taxes The following information about the payroll for the week ended October 4 was obtained from the records of Simkins Mining Co.: Salaries: Deductions: Sales salaries $30,000 Income tax withheld $17,000 Employee Wages 40,000 U.S. savings bonds 2,000 Office salaries 20,000 Group insurance 6,000 $90,000 Tax rates assumed: FICA tax, 7.5% of employee annual earnings State unemployment (employer only), 4.2% Federal unemployment (employer only), 0.8% Instructions: 1. For the October 4 payroll, determine the employee FICA tax payable. $_____________ 2. Illustrate the effect on the accounts and financial statements of recording the October 4 payroll. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. (chart in screenshot) Dropdown options from top left - right, bottom left - right Under assets: (Cash, salries payable, no effect) = (Accounts payable, employee income tax payable, no effect) + (Cash, FICA tax payable, No effect) + (Bond deduction payable, notes payable, no effect) + (Cash, Group insurance payable, no effect) + (Accounts payable, Salaries payable, No effect) + Under Stakeholders Equity: (Capital stock, retained earnings, no effect) Under Statement of cash flows: (Financing, Investing, operating, no effect) Under 1st income statement bar: (Sales salaries expense, sales discounts, sales, no effect) Under 2nd income statement bar: (Cost of merchandise sold, employee wages expense, payroll tax expense, no effect) Under 3rd income statement bar: (Cost of merchandise sold, office salaries expense, sales, no effect) 3. Determine the following amounts for the employer payroll taxes related to the October 4 payroll: (a) FICA tax payable, (b) state unemployment tax payable, and (c) federal unemployment tax payable. a. FICA tax payable $___________ b. State unemployment tax payable $___________ c. Federal unemployment tax payable $___________ 4. Illustrate the effect on the accounts and financial statements of recording the liability for the October 4 employer payroll taxes. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. (Chart in screenshot) Dropdown options from top left - right, bottom left - right Under assets: (Cash, FICA tax payable, no effect) = (Accounts payable, FICA tax payable, no effect) + (Employee income, SUTA payable, no effect) + (FUTA payable, Salaries payable, no effect) + (Capital stock, retained earnings, no effect) Under Statement of cash flows: (Financing, Investing, operating, no effect) Under income statement bar: (FICA tax expense, Payroll tax expense, sales, no effect)
Recording Payroll and Payroll Taxes
The following information about the payroll for the week ended October 4 was obtained from the records of Simkins Mining Co.:
| Salaries: | Deductions: | ||||||
| Sales salaries | $30,000 | Income tax withheld | $17,000 | ||||
| Employee Wages | 40,000 | U.S. savings bonds | 2,000 | ||||
| Office salaries | 20,000 | Group insurance | 6,000 | ||||
| $90,000 |
| Tax rates assumed: |
| FICA tax, 7.5% of employee annual earnings |
| State |
| Federal unemployment (employer only), 0.8% |
Instructions:
1. For the October 4 payroll, determine the employee FICA tax payable. $_____________
2. Illustrate the effect on the accounts and financial statements of recording the October 4 payroll. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and
Dropdown options from top left - right, bottom left - right
Under assets: (Cash, salries payable, no effect)
= (Accounts payable, employee income tax payable, no effect)
+ (Cash, FICA tax payable, No effect)
+ (Bond deduction payable, notes payable, no effect)
+ (Cash, Group insurance payable, no effect)
+ (Accounts payable, Salaries payable, No effect)
+ Under Stakeholders Equity: (Capital stock,
Under Statement of
Under 1st income statement bar: (Sales salaries expense, sales discounts, sales, no effect)
Under 2nd income statement bar: (Cost of merchandise sold, employee wages expense, payroll tax expense, no effect)
Under 3rd income statement bar: (Cost of merchandise sold, office salaries expense, sales, no effect)
3. Determine the following amounts for the employer payroll taxes related to the October 4 payroll: (a) FICA tax payable, (b) state unemployment tax payable, and (c) federal unemployment tax payable.
| a. FICA tax payable | $___________ |
| b. State unemployment tax payable | $___________ |
| c. Federal unemployment tax payable | $___________ |
4. Illustrate the effect on the accounts and financial statements of recording the liability for the October 4 employer payroll taxes. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.
(Chart in screenshot)
Dropdown options from top left - right, bottom left - right
Under assets: (Cash, FICA tax payable, no effect)
= (Accounts payable, FICA tax payable, no effect)
+ (Employee income, SUTA payable, no effect)
+ (FUTA payable, Salaries payable, no effect)
+ (Capital stock, retained earnings, no effect)
Under Statement of cash flows: (Financing, Investing, operating, no effect)
Under income statement bar: (FICA tax expense, Payroll tax expense, sales, no effect)
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