High School

Entries for Payroll and Payroll Taxes

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

**Salaries:**
- Sales salaries: $223,000
- Warehouse salaries: $123,000
- Office salaries: $114,000
- Total: $460,000

**Deductions:**
- Federal income tax withheld: $80,960
- Social security tax withheld: $27,600
- Medicare tax withheld: $6,900
- Retirement savings: $10,120
- Group insurance: $8,280
- Total Deductions: $133,860

**Tax rates assumed:**
- Social security: 6%
- Medicare: 1.5%
- State unemployment (employer only): 5.4%
- Federal unemployment (employer only): 0.6%

**Required:**

1a. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the entry on December 30 to record the payroll.

- **Date:** Dec. 30
- **Account**: Debit | Credit
- **[Enter specific accounts, e.g., Salaries Expense, etc.]**

1b. Journalize the entry on December 30 to record the employer's payroll taxes on the payroll, assuming that $23,000 of the total payroll for the last week of the year is subject to unemployment compensation taxes.

- **Date:** Dec. 30
- **Account**: Debit | Credit
- **[Enter specific accounts, e.g., Payroll Tax Expense, etc.]**

2a. Assuming that the payroll for the last week of the year is to be paid on January 4 of the following fiscal year, journalize the entry on December 30 to record the payroll.

- **Date:** Dec. 30
- **Account**: Debit | Credit
- **[Enter specific accounts, e.g., Salaries Payable, etc.]**

2b. Journalize the entry to record the employer's payroll taxes on the payroll to be paid on January 4, assuming all $460,000 in salaries is subject to unemployment compensation taxes due to the start of a new fiscal year.

- **Date:** Jan. 4
- **Account**: Debit | Credit
- **[Enter specific accounts, e.g., Payroll Tax Payable, etc.]**

Answer :


To record the payroll for the last week of the year, the journal entry on December 30 would be as follows:

Date | Account | Debit | Credit
Dec. 30 | Salaries Expense | $460,000 |
Dec. 30 | Social Security Tax Payable | | $27,600
Dec. 30 | Medicare Tax Payable | | $6,900
Dec. 30 | Federal Income Tax Payable | | $80,960
Dec. 30 | Retirement Savings Payable | | $10,120
Dec. 30 | Group Insurance Payable | | $8,280


In this journal entry, the salaries expense of $460,000 is debited to record the amount paid to employees. On the credit side, we have various accounts representing the deductions from the salaries.The Social Security Tax Payable account is credited with $27,600, which represents the 6% social security tax withheld from the employees' salaries. The Medicare Tax Payable account is credited with $6,900, which represents the 1.5% Medicare tax withheld. The Federal Income Tax Payable account is credited with $80,960, which represents the federal income tax withheld from the employees' salaries.

Additionally, the Retirement Savings Payable account is credited with $10,120, which represents the amount withheld for retirement savings. The Group Insurance Payable account is credited with $8,280, which represents the amount withheld for group insurance.By journalizing this entry, we are recording the payment of salaries and the corresponding deductions for taxes, retirement savings, and group. This entry helps in accurately reflecting the financial impact of the payroll on the company's records.

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