FINANCIAL ACCT.-W/ETEXTBOOK
FINANCIAL ACCT.-W/ETEXTBOOK
10th Edition
ISBN: 9781119428985
Author: Weygandt
Publisher: WILEY
Question
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Chapter I, Problem 1Q
To determine

Payroll

Payroll is a term which relates to both wages and salaries of employee.

Gross pay

An employee’s total compensation earned is called as gross pay.

Net pay

Employee’s total compensation earned minus payroll deduction is called as net pay.

To find: The difference between gross pay and net pay.

Expert Solution
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Explanation of Solution

Difference between gross pay and net pay is shown as follows:

Gross pay Net pay
Employee actual earnings are called as gross pay. Gross pay minus payroll deductions (FICA taxes, Federal income taxes and State unemployment tax etc.) are called as net pay.

Table (1)

To determine

To find: Which amount should a company record as wages and salaries expense.

Expert Solution
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Explanation of Solution

Gross pay should be recorded as wages and salaries expense.

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On July 31, 2025, the general ledger of Cullumber Legal Services Inc. showed the following balances: Cash $4,960, Accounts Receivable $1,860, Supplies $620, Equipment $6,200, Accounts Payable $5,080, Common Stock $4,340, and Retained Earnings $4,220. During August, the following transactions occurred. Aug. 3 5 Collected $1,490 of accounts receivable due from customers. Received $1,610 cash for issuing common stock to new investors. 6 Paid $3,350 cash on accounts payable. 7 Performed legal services of $8,060, of which $3,720 was collected in cash and the remainder was due on account. 2 2 2 2 2 12 Purchased additional equipment for $1,490, paying $500 in cash and the balance on account. 14 Paid salaries $4,340, rent $1,120, and advertising expenses $340 for the month of August. 18 20 24 26 27 Collected the balance for the services performed on August 7. Paid cash dividend of $620 to stockholders. Billed a client $1,240 for legal services performed. Received $2,480 from Laurentian Bank;…
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