Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period. Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities. Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. To Journalize: The given transaction of Company SBP, to determine the net effect of salaries expense incurred and paid in the accounting year.

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Chapter 21, Problem 21.4BE

To determine

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The given transaction of Company SBP, to determine the net effect of salaries expense incurred and paid in the accounting year.

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58 Part 2: Accounting for Cash and Payroll LO 1, 2, 3 EXERCISE 7-7 Precision Labs has two employees. The following information was taken from its individual earnings records for the month of September. Determine the missing amounts assuming that the Social Security tax is 6.2 percent, the Medicare tax is 1.45 percent, and the state income tax is 20 percent of the federal income tax. Assume that the employees are married and have one withholding allowance. All earnings are subject to Social Security and Medicare taxes. Round amounts to the nearest penny. Practice Exercises 1,2,3 Brown Ringness Total Regular earnings Overtime earnings Total earnings $3,500.00 2$ 24 120.00 $3,646.00 24 24 Federal income tax withheld $ 320.00 2$ 2$ State income tax withheld 36.76 169.76 Social Security tax withheld Medicare tax withheld 226.05 52.87 39.70 Charity withheld 35.00 97.00 $ 697.92 $ 527.02 $ 2,210.98 Total deductions 2$ Net pay 2$

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