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% Indicate the effects on net assets and EPS of each of the following: 1. Recording the payroll. 2. Recording the payroll taxes. 3. Paying the payroll and payroll taxes. Solvency Metric Profitability Metric Net Assets Earnings per Share 1. Recording payroll $___________ Decrease, increase or no effect ? 2. Recording payroll taxes $___________ Decrease, increase or no effect ? 3. Paying payroll and payroll taxes Decrease, increase or no effect ? Decrease, increase or 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 unemployment (employer only), 4.2% Federal unemployment (employer only), 0.8% Indicate the effects on net assets and EPS of each of the following: 1. Recording the payroll. 2. Recording the payroll taxes. 3. Paying the payroll and payroll taxes. Solvency Metric Profitability Metric Net Assets Earnings per Share 1. Recording payroll $___________ Decrease, increase or no effect ? 2. Recording payroll taxes $___________ Decrease, increase or no effect ? 3. Paying payroll and payroll taxes Decrease, increase or no effect ? Decrease, increase or no effect ?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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% |
Indicate the effects on net assets and EPS of each of the following:
1. Recording the payroll.
2. Recording the payroll taxes.
3. Paying the payroll and payroll taxes.
| Solvency Metric | Profitability Metric | |
| Net Assets | Earnings per Share | |
| 1. Recording payroll | $___________ | Decrease, increase or no effect ? |
| 2. Recording payroll taxes | $___________ | Decrease, increase or no effect ? |
| 3. Paying payroll and payroll taxes | Decrease, increase or no effect ? | Decrease, increase or no effect ? |
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