Chapter 11, Problem 17E

a.

To determine

Complete the payroll register by filling in all cells for the pay period ended August 31.

Explanation of Solution

Payroll tax:

Payroll tax refers to the tax that are equally contributed by employees and 
employer based on the salary and wages of an employee. Payroll tax includes taxes 
like federal tax, local income tax, state tax, social security tax and federal and 
state unemployment tax.

(Table 1)

b.

To determine

Prepare journal entry to record the accrued biweekly payroll and related liabilities for deductions.

Explanation of Solution

Date	Account Titles and Explanation	Debit (Amount in $)	Credit (Amount in $)
August 31	Salaries expense	10,020.00
	FICA - Social security taxes payable		298.84
	FICA- Medicare taxes payable		145.29
	Federal income taxes payable-                  Employee		2,380.00
	State income taxes payable-      Employee		388.00
	Employee benefits plan payable		501.00
	Salaries payable		6306.87
	(To record the payroll for period)

(Table 2)

• Salaries expense is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the salaries expense by $10,020.00
• FICA- Social security taxes payable is a liability and there is an increase in the value of liability. Hence, credit the FICA- social security taxes payable by $298.84.
• FICA- Medicare taxes payable is a liability and there is an increase in the value of liability. Hence, credit the FICA- Medicare taxes payable by $145.29
• Federal income taxes payable- employee is a liability and there is an increase in the value of liability. Hence, credit the federal income taxes payable by $2,380.00.
• State income taxes payable- employee is a liability and there is an increase in the value of liability. Hence, credit the state income taxes payable by $388.00.
• Employee benefits plan payable is a liability and there is an increase in the value of liability. Hence, credit the employee benefits plan payable by $501.00.
• Salaries payable is a liability and there is an increase in the value of liability. Hence, credit the salaries payable by $6,306.87.

c.

To determine

Prepare journal entry to record the employer’s cash payment of the net payroll of requirement b.

Explanation of Solution

Date	Account Titles and Explanation	Debit (Amount in $)	Credit (Amount in $)
August 31	Salaries payable	6,306.87
	Cash		6306.87
	(To record the payment of  payroll)

(Table 3)

• Salaries payable is a liability and there is a decrease in the value of liability. Hence, debit the salaries payable by $6,306.87.
• Cash is an asset and there is a decrease the value of an asset. Hence, credit the cash by $6,306.87.

d.

To determine

Prepare journal entry to record the employer’s payroll taxes including the contribution to the benefits plan.

Explanation of Solution

Date	Account Titles and Explanation	Debit (Amount in $)	Credit (Amount in $)
August 31	Payroll tax expense	530.53
	FICA - Social security taxes payable		298.84
	FICA- Medicare taxes payable		145.29
	Federal unemployment taxes payable		8.64
	State unemployment taxes payable		77.76
	(To record the payroll taxes)

(Table 4)

• Payroll tax expense is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the payroll tax expense by $530.53.
• FICA- Social security taxes payable is a liability and there is an increase in the value of liability. Hence, credit the FICA- social security taxes payable by $298.84.
• FICA- Medicare taxes payable is a liability and there is an increase in the value of liability. Hence, credit the FICA- Medicare taxes payable by $145.29
• Federal unemployment taxes payable is a liability and there is an increase in the value of liability. Hence, credit the federal unemployment taxes payable by $8.64.
• State unemployment taxes payable is a liability and there is an increase in the value of liability. Hence, credit the state unemployment taxes payable by $77.76.

Date	Account Titles and Explanation	Debit (Amount in $)	Credit (Amount in $)
August 31	Employee benefits expense	1,002.00
	Employee benefits plan payable		1,002.00
	(To record the cost  of  employee benefits)

(Table 5)

• Employee benefits expense is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the employee benefits expense by $1,002.00.
• Employee benefits plan payable is a liability and there is an increase in the value of liability. Hence, credit the employee benefits plan payable by $1,002.00.

e.

To determine

Prepare journal entry to record to pay all liabilities (except for the net payroll in requirement c) for this biweekly period.

Explanation of Solution

Date	Account Titles and Explanation	Debit (Amount in $)	Credit (Amount in $)
August 31	FICA - Social security taxes payable	597.68
	FICA- Medicare taxes payable	290.58
	Federal income taxes payable- employee	2,380.00
	State income taxes payable- employee	388.00
	Employee benefits plan payable	1,503.00
	Federal unemployment taxes payable	8.64
	State unemployment taxes payable	77.76
	Cash		5,245.66
	(To record payment of FICA, income taxes, SUTA, FUTA, and benefit plan contributions)

(Table 6)

• FICA- Social security taxes payable is a liability and there is a decrease in the value of liability. Hence, debit the FICA- social security taxes payable by $597.68.
• FICA- Medicare taxes payable is a liability and there is a decrease in the value of liability. Hence, debit the FICA- Medicare taxes payable by $290.58.
• Federal income taxes payable- employee is a liability and there is a decrease in the value of liability. Hence, debit the federal income taxes payable by $2,380.00.
• State income taxes payable- employee is a liability and there is a decrease in the value of liability. Hence, debit the state income taxes payable by $388.00.
• Employee benefits plan payable is a liability and there is a decrease in the value of liability. Hence, debit the employee benefits plan payable by $1,503.00
• Federal unemployment taxes payable is a liability and there is a decrease in the value of liability. Hence, debit the federal unemployment taxes payable by $8.64.
• State unemployment taxes payable is a liability and there is a decrease in the value of liability. Hence, debit the state unemployment taxes payable by $77.76.
• Cash is an asset and there is a decrease the value of an asset. Hence, credit the cash by $5,245.66.