Chapter 11, Problem 5PB

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:

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: 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 the payroll bank account.

12. Journalized the entry to record payroll taxes on employees’ earnings of December12: social security tax, $1,452; 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:

26. Issued Check No. 840 for the net amount of the biweekly payroll to fund the payroll bank account.

Dec. 26. Journalized the entry to record payroll taxes on employees’ earnings of December 26: social security tax, $1,455; Medicare tax, $364; state unemployment tax, $150; federal unemployment tax, $40.

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.