Chapter 9, Problem 17E

a.

To determine

To prepare:

The payroll register by filling in the empty cells.

Explanation of Solution

Prepare the payroll register as shown below.

Table 1

Working notes:

1. Calculation of FUTA of A.

$\begin{array}{c}\text{FUTA}\text{of}\text{A}=0.6\%\text{of}\text{first}\$7,000\\ =0.6\%\times \$200\\ =\$1.2\end{array}$

2. Calculation of FUTA of Z.

$\begin{array}{c}\text{FUTA}\text{of}\text{Z}=0.6\%\text{of}\text{first}\$7,000\\ =0.6\%\times \$500\\ =\$3\end{array}$

3. Calculation of FUTA of G.

$\begin{array}{c}\text{FUTA}\text{of}\text{G}=0.6\%\text{of}\text{first}\$7,000\\ =0.6\%\times \$2000\\ =\$12\end{array}$

4. Calculation of SUTA of A.

$\begin{array}{c}\text{SUTA}\text{of}\text{A}=5.4\%\text{of}\text{first}\$7,000\\ =5.4\%\times \$200\\ =\$10.8\end{array}$

5. Calculation of SUTA of Z.

$\begin{array}{c}\text{SUTA}\text{of}\text{Z}=5.4\%\text{of}\text{first}\$7,000\\ =5.4\%\times \$500\\ =\$27\end{array}$

6. Calculation of SUTA of G.

$\begin{array}{c}\text{SUTA}\text{of}\text{G}=5.4\%\text{of}\text{first}\$7,000\\ =5.4\%\times \$2000\\ =\$108\end{array}$

7. Calculation of security tax of K.

$\begin{array}{c}\text{Social}\text{security}\text{tax}\text{of}\text{K}=6.2\%\text{of}\text{first}\$118,500\\ =6.2\%\times \$1800\\ =\$111.6\end{array}$

8. Calculation of security tax of A.

$\begin{array}{c}\text{Social}\text{security}\text{tax}\text{of}\text{A}=6.2\%\text{of}\text{first}\$118,500\\ =6.2\%\times \$500\\ =\$31\end{array}$

9. Calculation of security tax of N.

$\begin{array}{c}\text{Social}\text{security}\text{tax}\text{of}\text{N}=6.2\%\text{of}\text{first}\$118,500\\ =6.2\%\times \$920\\ =\$57.04\end{array}$

10. Calculation of security tax of Z.

$\begin{array}{c}\text{Social}\text{security}\text{tax}\text{of}\text{Z}=6.2\%\text{of}\text{first}\$118,500\\ =6.2\%\times \$860\\ =\$53.40\end{array}$

11. Calculation of security tax of G.

$\begin{array}{c}\text{Social}\text{security}\text{tax}\text{of}\text{G}=6.2\%\text{of}\text{first}\$118,500\\ =6.2\%\times \$740\\ =\$46\end{array}$

12. Calculation of Medicare tax of K.

$\begin{array}{c}\text{Medicare}\text{tax}\text{of}\text{K}=1.45\%\text{of}\text{gross}\text{pay}\\ =1.45\%\times \$7,000\\ =\$101.5\end{array}$

13. Calculation of Medicare tax of A.

$\begin{array}{c}\text{Medicare}\text{tax}\text{of}\text{A}=1.45\%\text{of}\text{gross}\text{pay}\\ =1.45\%\times \$500\\ =\$7.25\end{array}$

14. Calculation of Medicare tax of N.

$\begin{array}{c}\text{Medicare}\text{tax}\text{of}\text{N}=1.45\%\text{of}\text{gross}\text{pay}\\ =1.45\%\times \$920\\ =\$13.34\end{array}$

15. Calculation of Medicare tax of Z.

$\begin{array}{c}\text{Medicare}\text{tax}\text{of}\text{Z}=1.45\%\text{of}\text{gross}\text{pay}\\ =1.45\%\times \$860\\ =\$12.47\end{array}$

16. Calculation of Medicare tax of G.

$\begin{array}{c}\text{Medicare}\text{tax}\text{of}\text{G}=1.45\%\text{of}\text{gross}\text{pay}\\ =1.45\%\times \$740\\ =\$10.73\end{array}$

17. Calculation of employee benefit of K.

$\begin{array}{c}\text{Employee}\text{benefit}\text{of}\text{K}=5\%\times \text{Gross}\text{Pay}\\ =5\%\times \$7,000\\ =\$350\end{array}$

18. Calculation of employee benefit of A.

$\begin{array}{c}\text{Employee}\text{benefit}\text{of}\text{A}=5\%\times \text{Gross}\text{Pay}\\ =5\%\times \$500\\ =\$25\end{array}$

19. Calculation of employee benefit of N.

$\begin{array}{c}\text{Employee}\text{benefit}\text{of}\text{N}=5\%\times \text{Gross}\text{Pay}\\ =5\%\times \$920\\ =\$46\end{array}$

20. Calculation of employee benefit of Z.

$\begin{array}{c}\text{Employee}\text{benefit}\text{of}\text{Z}=5\%\times \text{Gross}\text{Pay}\\ =5\%\times \$860\\ =\$43\end{array}$

21. Calculation of employee benefit of G.

$\begin{array}{c}\text{Employee}\text{benefit}\text{of}\text{G}=5\%\times \text{Gross}\text{Pay}\\ =5\%\times \$740\\ =\$37\end{array}$

22. Calculation of net pay of K.

$\begin{array}{c}\text{Net}\text{pay}\text{of}\text{K}=\left[\begin{array}{l}\text{Gross}\text{pay}-\text{FIT}-\text{SIT}-\text{Social}\text{security}\text{tax}\\ -\text{Medicare}\text{tax}-\text{Benefit}\text{of}\text{employee}\end{array}\right]\\ =\$7000-\$2000-\$300-\$111.6-\$101.5-\$350\\ =\$4136.9\end{array}$

23. Calculation of net pay of A.

$\begin{array}{c}\text{Net}\text{pay}\text{of}\text{A}=\left[\begin{array}{l}\text{Gross}\text{pay}-\text{FIT}-\text{SIT}-\text{Social}\text{security}\text{tax}\\ -\text{Medicare}\text{tax}-\text{Benefit}\text{of}\text{employee}\end{array}\right]\\ =\$500-\$80-\$20-\$31-\$7.25-\$25\\ =\$336.75\end{array}$

24. Calculation of net pay of N.

$\begin{array}{c}\text{Net}\text{pay}\text{of}\text{N}=\left[\begin{array}{l}\text{Gross}\text{pay}-\text{FIT}-\text{SIT}-\text{Social}\text{security}\text{tax}\\ -\text{Medicare}\text{tax}-\text{Benefit}\text{of}\text{employee}\end{array}\right]\\ =\$920-\$110-\$25-\$57.04-\$13.34-\$46\\ =\$668.62\end{array}$

25. Calculation of net pay of Z.

$\begin{array}{c}\text{Net}\text{pay}\text{of}\text{Z}=\left[\begin{array}{l}\text{Gross}\text{pay}-\text{FIT}-\text{SIT}-\text{Social}\text{security}\text{tax}\\ -\text{Medicare}\text{tax}-\text{Benefit}\text{of}\text{employee}\end{array}\right]\\ =\$860-\$100-\$22-\$53.40-\$13.34-\$92\\ =\$579.26\end{array}$

26. Calculation of net pay of G.

$\begin{array}{c}\text{Net}\text{pay}\text{of}\text{G}=\left[\begin{array}{l}\text{Gross}\text{pay}-\text{FIT}-\text{SIT}-\text{Social}\text{security}\text{tax}\\ -\text{Medicare}\text{tax}-\text{Benefit}\text{of}\text{employee}\end{array}\right]\\ =\$740-\$90-\$21-\$46-\$10.73-\$37\\ =\$535.27\end{array}$

b.

To determine

To prepare:

The journal entry for accrued biweekly payroll.

Answer to Problem 17E

Prepare the journal entry for accrued biweekly payroll as shown below.

Date	Particulars	L/F	Debit ($)	Credit ($)
Aug 31	Salaries expense		10,020
	FICA - Social security taxes payable			299.04
	FICA - Medicare taxes payable			145.29
	Employee federal taxes payable			2,380
	Employee state taxes payable			388
	Employee benefits plan payable			501
	Salaries payable			6306.67
	(To record the payroll for August)

Table 2

Explanation of Solution

• Salaries expense is an expense account for a company. Since the balance of this account increases, it is debited.

• FICA social security taxes payable is a liability to a company. Its balance increases, so it is credited.

• FICA Medicare taxes payable is a liability to a company. Its balance increases, so it is credited.

• Employee federal taxes payable is a liability to a company. Its balance increases, so it is credited.

• Employee state taxes payable is a liability to a company. Its balance increases, so it is credited.

• Salaries payable is a liability to a company. Its balance increases, so it is credited.

c.

To determine

To prepare:

The journal entry to record employer’s cash payment of the net payroll

Answer to Problem 17E

Prepare the journal entry to record employer’s cash payment of the net payroll as shown below.

Date	Particulars	L/F	Debit ($)	Credit ($)
Aug 31	Salaries payable		6306.67
	Cash			6306.67
	(To record the payment for August)

Table 3

Explanation of Solution

• Salaries payable is a liability to company. Its balance decreases, so it is debited.

• Cash is an asset account. Since the company is paying salaries, cash is reducing. Hence, cash is credited.

d.

To determine

To prepare:

The journal entry to record employer’s payroll taxes.

Answer to Problem 17E

Prepare the journal entry to record employer’s payroll taxes as shown below.

Date	Particulars	L/F	Debit ($)	Credit ($)
Aug31	Payroll taxes expense		3212.33
	Employee benefit plan expenses		1,002
	Employee benefit plan payable			1,002
	FICA - Social security taxes payable			299.04
	FICA - Medicare taxes payable			145.29
	Employee federal taxes payable			2,380
	Employee state taxes payable			388
	(To record the employer’s payroll taxes)

Table 4

Explanation of Solution

• Payroll taxes are an expense account for a company. Since the balance of this account increases, it is debited.

• Employee benefit plan is an expense account for a company. Since the balance of this account increases, it is debited.

• Employee benefit plan is a liability to a company. Its balance increases, so it is credited.

• FICA social security taxes payable is a liability to a company. Its balance increases, so it is credited.

• FICA Medicare taxes payable is a liability to a company. Its balance increases, so it is credited.

• Employee federal taxes payable is a liability to a company. Its balance increases, so it is credited.

• Employee state taxes payable is a liability to a company. Its balance increases, so it is credited.

e.

To determine

To prepare:

The journal entry to pay all liabilities.

Answer to Problem 17E

Prepare the journal entry to pay all liabilities as shown below.

Date	Particulars	L/F	Debit ($)	Credit ($)
Aug 31	FICA - Social security taxes payable		598.08
	FICA - Medicare taxes payable		290.58
	Employee federal taxes payable		2,380
	Employee state taxes payable		388
	Employee benefits plan payable		1,503
	FUTA payable		16.2
	SUTA payable		145.8
	Cash			5321.66
	(To record the payment of all liabilities)

Table 5

Explanation of Solution

• FICA Social security taxes payable is a liability to a company. Its balance decreases, so it is debited.

• FICA Medicare taxes payable is a liability to a company. Its balance decreases, so it is debited.

• Employee federal taxes payable is a liability to a company. Its balance decreases, so it is debited.

• Employee state taxes payable is a liability to a company. Its balance decreases, so it is debited.

• Employee benefit plan is a liability to a company. Its balance decreases, so it is debited.

• FUTA payable is a liability to a company. Its balance decreases, so it is debited.

• SUTA payable is a liability to company. Its balance decreases, so it is debited.

• Cash is an asset account. Since company is paying salaries, its liability decreases. Hence, cash is credited.