The following information about the payroll for the week ended December 30 was obtained from the records of Qualitech Co.:

The following information about the payroll for the week ended December 30 was obtained from the records of Qualitech Co.:
















Salaries: Deductions:
Sales salaries $350,000 Income tax withheld $118,800
Warehouse salaries 180,000 Social security tax withheld 40,500
Office salaries 145,000 Medicare tax withheld 10,125
$675,000 U.S. savings bonds 14,850
Group insurance 12,150
$196,425
Tax rates assumed:
Social security, 6%
Medicare, 1.5%
State unemployment (employer only), 5.4%
Federal unemployment (employer only), 0.8%




Instructions
1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries:
a. December 30, to record the payroll.
b. December 30, to record the employer’s payroll taxes on the payroll to be paid on December 31. Of the total payroll for the last week of the year, $35,000 is subject to unemployment compensation taxes.
2. Assuming that the payroll for the last week of the year is to be paid on January 5 of the following fiscal year, journalize the following entries:
a. December 30, to record the payroll.
b. January 5, to record the employer’s payroll taxes on the payroll to be paid on January
5. Since it is a new fiscal year, all $675,000 in salaries is subject to unemployment compensation taxes.


Answer:






























1. a. Dec. 30 Sales Salaries Expense 350,000
Warehouse Salaries Expense 180,000
Office Salaries Expense 145,000
Employees Income Tax Payable 118,800
Social Security Tax Payable 40,500
Medicare Tax Payable 10,125
Bond Deductions Payable 14,850
Group Insurance Payable 12,150
Salaries Payable 478,575
b. Dec. 30 Payroll Tax Expense 52,795
Social Security Tax Payable 40,500
Medicare Tax Payable 10,125
State Unemployment Tax Payable1 1,890
Federal Unemployment Tax Payable2 280

1 $35,000 × 5.4%
2 $35,000 × 0.8%
2. a. Dec. 30 Sales Salaries Expense 350,000
Warehouse Salaries Expense 180,000
Office Salaries Expense 145,000
Employees Income Tax Payable 118,800
Social Security Tax Payable1 40,500
Medicare Tax Payable2 10,125
Bond Deductions Payable 14,850
Group Insurance Payable 12,150
Salaries Payable 478,575
1 $675,000 × 6%
2 $675,000 × 1.5%
b. Jan. 5 Payroll Tax Expense 92,475
Social Security Tax Payable 40,500
Medicare Tax Payable 10,125
State Unemployment Tax Payable3 36,450
Federal Unemployment Tax Payable4 5,400

3 $675,000 × 5.4%
4 $675,000 × 0.8%