Chapter 11, Problem 11.5BPR

Payroll accounts and year-end entries

The following accounts, with the balances indicated, appear in the ledger of Codigo Co. on December 1 of the current year:

101 Salaries Payable	—
102 Social Security Tax Payable	52,913
103 Medicare Tax Payable	728
104 Employees Federa1 Income Tax Payable	4,490
1 OS Employees State Income Tax Payable	4,073
T C-5 State Unemployment Tax Payable	1,260
107 Federal Unemployment Tax Payable	360
108 Retirement Savings
Deductions Payable	$ 2,300
109 Medical Insurance Payable	2,520
201 Sales Salaries Expense	700,000
301 Officers Salaries Expense	340,00O
401 Office Salaries Expense	125,000
408 Payroll Tax Expense	59,491

The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December:

Dec. 1.	Issued Check No. 815 to Aberderas Insurance Company for $2,520, in payment of the semiannual premium on the group medical insurance policy.
1,	Issued Check No. 816 to Alvarez. Bank for $8,131, in payment for $2,913 of social security tax, $728 of Medicare tax, and $4,490 of employees’ federal income tax due.
2.	Issued Check No. 817 for $2,300 to Alvarez Bank to invest in a retirement savings account for employees.
12	Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:
12.	Issued Check No. 822 in payment of the net amount of the biweekly payroll to fund tile payroll bank account.
12.	Journalized the entry to record payroll taxes on employees' earnings of December 12: social security tax, SI,452; Medicare tax, $363: state unemployment tax, $315: federal unemployment tax. $90.
15.	Issued Check No. 830 to Alvarez Bank for $7,938, in payment of $2,904 of social security tax, $726 of Medicare tax, and $4,308 of employees' federal income tax due.
26.	Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:
Dec. 26.	Journalized the entry to record payroll taxes on employees' earnings of December 26: social security tax, SI,455; Medicare tax, $364; state unemployment tax, SI50; federal unemployment tax, S40.
30.	Issued Check No. 851 for $6,258 to State Department of Revenue, in payment of employees' state income tax due on December 31.
30.	Issued Check No. 852 to Alvarez Bank for $2,300 to invest in a retirement savings account for employees.
31	Paid $55,400 to the employee pension plan. The annual pension cost is $65,500. (Record both the payment and the unfunded pension liability.)

Instructions

1. 1. Journalize the transactions.
2. 2. Journalize the following adjusting entries on December 31:
   1. a. Salaries accrued: sales salaries, $4,275; officers salaries, $2,175; office salaries, $825. The payroll taxes are immaterial and are not accrued.
   2. b. Vacation pay, $13,350.