Bundle: Corporate Financial Accounting, Loose-leaf Version, 14th + CengageNOWv2, 1 term Printed Access Card
Bundle: Corporate Financial Accounting, Loose-leaf Version, 14th + CengageNOWv2, 1 term Printed Access Card
14th Edition
ISBN: 9781337130691
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
Question
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Chapter 10, Problem 10.2BPR

1.

A.

To determine

Payroll: The total payment that a company is required to pay to its employee for the services received is called as payroll.

Payroll withholding deduction: The amounts which the employer withheld from employees’ gross pay to deduct taxes such as federal income tax, state income tax, local income tax, and social security tax are called payroll withholding deduction.

Employer payroll taxes: The taxes which the employer must pay to the employees with their salaries is called employer payroll taxes. Such taxes are not withheld from employees’ gross earnings but instead they are paid by employer.

To Journalize: The entry to record the payroll on December 30.

1.

A.

Expert Solution
Check Mark

Answer to Problem 10.2BPR

Prepare journal entry to record the payroll on December 30.

Date Accounts and Explanation Post Ref Debit ($) Credit ($)
December 30 Sales Salaries Expense 625,000
  Warehouse Salaries Expense 240,000
  Office salaries Expense 320,000
Social Security Taxes Payable (1) 71,100
      Medicare Taxes Payable (2)     17,775
      Employees Income Taxes Payable     232,260
Bond Deductions Payable 35,500
Group Insurance Payable 53,325
      Salaries Payable     775,040
(To record salaries expense and payroll withholdings)
               

Table (1)

Explanation of Solution

Working notes:

Calculate the amount of social security taxes payable as below:

Social security taxes=$1,185,000×6%=$71,100 (1)

Calculate the amount of Medicare taxes payable as below:

Medicare taxes payable=$1,185,000×1.5%=$17,775 (2)

  • Sales salaries expense is an expense and it decreases equity value. So, debit it by $625,000.
  • Warehouse salaries expense is an expense and it decreases equity value. So, debit it by $240,000.
  • Office salaries expense is an expense and it decreases equity value. So, debit it by $320,000.
  • Social security taxes payable is a liability and it is increased. So, credit it by $71,100.
  • Medicare taxes payable is a liability and it is increased. So, credit it by $17,775.
  • Employee income taxes payable is a liability and it is increased. So, credit it by $232,260.
  • Bond Deductions payable is a liability and it is increased. So, credit it by $35,500.
  • Group insurance payable is a liability and it is increased. So, credit it by $53,325.
  • Salaries payable is a liability and it is increased. So, credit it by $775,040.

B.

To determine

To Journalize: The employer’s payroll taxes expense on December 30.

B.

Expert Solution
Check Mark

Answer to Problem 10.2BPR

Prepare journal entry to record employer’s payroll taxes expense on December 30.

Date Accounts and Explanation Post Ref Debit ($) Credit ($)
December 30 Payroll Tax Expense 90,735
Social Security Taxes Payable (1) 71,100
      Medicare Taxes Payable  (2)     17,775
      Federal Unemployment Taxes Payable (3)     240
      State  Unemployment Taxes Payable (4)     1,620
(To record employer’s payroll taxes expense)
               

Table (2)

Explanation of Solution

Calculate the amount of Federal unemployment taxes as below:

Federal Unemployment taxes=$30,000×0.8%=$240 (3)

Calculate the amount of State unemployment taxes as below:

State Unemployment taxes payable=$30,000×5.4%=$1,620 (4)

  • Payroll tax expense is an expense and it decreases equity value. So, debit it by $90,675.
  • Social security taxes payable is a liability and it is increased. So, credit it by $71,100.
  • Medicare taxes payable is a liability and it is increased. So, credit it by $17,775.
  • Federal unemployment taxes payable is a liability and it is increased. So, credit it by $240.
  • State unemployment taxes payable is a liability and it is increased. So, credit it by $1,620.

2.

A.

To determine

To Journalize: The entry to record the payroll on December 30.

2.

A.

Expert Solution
Check Mark

Answer to Problem 10.2BPR

Prepare journal entry to record the payroll on December 30.

Date Accounts and Explanation Post Ref Debit ($) Credit ($)
December 30 Sales Salaries Expense 625,000
  Warehouse Salaries Expense 240,000
  Office salaries Expense 320,000
Social Security Taxes Payable (5) 71,100
      Medicare Taxes Payable (6)     17,775
      Employees Income Taxes Payable     232,260
Bond Deductions Payable 35,500
Group Insurance Payable 53,325
      Salaries Payable     775,040
(To record salaries expense and payroll withholdings)
               

Table (3)

Explanation of Solution

Working notes:

Calculate the amount of social security taxes payable as below:

Social security taxes=$1,185,000×6%=$71,100 (5)

Calculate the amount of Medicare taxes payable as below:

Medicare taxes payable=$1,185,000×1.5%=$17,775 (6)

  • Sales salaries expense is an expense and it decreases equity value. So, debit it by $625,000.
  • Warehouse salaries expense is an expense and it decreases equity value. So, debit it by $240,000.
  • Office salaries expense is an expense and it decreases equity value. So, debit it by $320,000.
  • Social security taxes payable is a liability and it is increased. So, credit it by $71,100.
  • Medicare taxes payable is a liability and it is increased. So, credit it by $17,775.
  • Employee income taxes payable is a liability and it is increased. So, credit it by $232,260.
  • Bond Deductions payable is a liability and it is increased. So, credit it by $35,500.
  • Group insurance payable is a liability and it is increased. So, credit it by $53,325.
  • Salaries payable is a liability and it is increased. So, credit it by $775,040.

B.

To determine

To Journalize: The employer’s payroll taxes expense on January 5.

B.

Expert Solution
Check Mark

Answer to Problem 10.2BPR

Prepare journal entry to record employer’s payroll taxes expense on January 5.

Date Accounts and Explanation Post Ref Debit ($) Credit ($)
January 5 Payroll Tax Expense 162,345
Social Security Taxes Payable (5) 71,100
      Medicare Taxes Payable  (6)     17,775
      Federal Unemployment Taxes Payable (7)     9,480
      State  Unemployment Taxes Payable (8)     63,990
(To record employer’s payroll taxes expense)
               

Table (4)

Explanation of Solution

Calculate the amount of Federal unemployment taxes as below:

Federal Unemployment taxes=$1,185,000×0.8%=$9,480 (7)

Calculate the amount of State unemployment taxes as below:

State Unemployment taxes payable=$1,185,000×5.4%=$63,990 (8)

  • Payroll tax expense is an expense and it decreases equity value. So, debit it by $159,975.
  • Social security taxes payable is a liability and it is increased. So, credit it by $71,100.
  • Medicare taxes payable is a liability and it is increased. So, credit it by $17,775.
  • Federal unemployment taxes payable is a liability and it is increased. So, credit it by $9,480.
  • State unemployment taxes payable is a liability and it is increased. So, credit it by $63,990.

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Chapter 10 Solutions

Bundle: Corporate Financial Accounting, Loose-leaf Version, 14th + CengageNOWv2, 1 term Printed Access Card

Ch. 10 - Proceeds from notes payable On January 26, Nyree...Ch. 10 - Prob. 10.2BECh. 10 - Journalize period payroll The payroll register of...Ch. 10 - Prob. 10.4BECh. 10 - Prob. 10.5BECh. 10 - Journalizing installment notes On the first day of...Ch. 10 - Prob. 10.7BECh. 10 - Current liabilities Bon Nebo Co. sold 25,000...Ch. 10 - Entries for notes payable Bennett Enterprises...Ch. 10 - Evaluating alternative notes A borrower has two...Ch. 10 - Entries for notes payable A business issued a...Ch. 10 - Entries for discounted note payable A business...Ch. 10 - Fixed asset purchases with note On June 30,...Ch. 10 - Prob. 10.7EXCh. 10 - Calculate payroll An employee earns 44 per hour...Ch. 10 - Prob. 10.9EXCh. 10 - Summary payroll data In the following summary of...Ch. 10 - Payroll tax entries According to a summary of the...Ch. 10 - Payroll entries The payroll register for D. Salah...Ch. 10 - Prob. 10.13EXCh. 10 - Prob. 10.14EXCh. 10 - Prob. 10.15EXCh. 10 - Accrued vacation pay A business provides its...Ch. 10 - Prob. 10.17EXCh. 10 - Prob. 10.18EXCh. 10 - Entries for installment note transactions On the...Ch. 10 - Entries for installment note transactions On...Ch. 10 - Entries for installment note transactions On...Ch. 10 - Prob. 10.22EXCh. 10 - Prob. 10.23EXCh. 10 - Prob. 10.24EXCh. 10 - Liability transactions The following items were...Ch. 10 - Entries for payroll and payroll taxes The...Ch. 10 - Wage and tax statement data on employer FICA tax...Ch. 10 - Prob. 10.4APRCh. 10 - Payroll accounts and year-end entries The...Ch. 10 - Prob. 10.1BPRCh. 10 - Prob. 10.2BPRCh. 10 - Wage and tax statement data and employer FICA tax...Ch. 10 - Prob. 10.4BPRCh. 10 - Payroll accounts and year-end entries The...Ch. 10 - Prob. 3COPCh. 10 - Prob. 10.1ADMCh. 10 - Prob. 10.2ADMCh. 10 - Neiman Marcus and Kohls: Short-term liquidity...Ch. 10 - Cabelas and Dicks Sporting Goods: Short-term...Ch. 10 - Ethics in Action Tonya Latirno is a staff...Ch. 10 - Prob. 10.3TIF
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