177) On December 1, Williams Company borrowed $45,000 cash from Second National Bank
by signing a 90-day, 9% note payable.
a. Prepare Williams’ journal entry to record the issuance of the note payable.
b. Prepare Williams’ journal entry to record the accrued interest due at December 31.
c. Prepare Williams’ journal entry to record the payment of the note on March 1 of the next year.
178) A company borrowed $60,000 by signing a 60-day, 5% note payable from its bank.
Compute the total cash payment due on the note’s maturity date.
179) Calculate the total amount of FICA withholding for an employee whose pay is $2,400 for
the first pay period of the year. The tax rate for FICA–Social Security is 6.2% and the tax rate for
FICA–Medicare is 1.45%.
180) An employee earns $8,500 for the current period. The cumulative earnings of previous pay
periods is $100,900. Social security tax applies to the first $128,400 of employee earnings.
Calculate the total and individual amounts to be withheld for social security (6.2%), Medicare
(1.45%) and federal income tax (15%).
181) A company has three employees. Total salaries for the month of January were $8,000. The
federal income tax rate for all employees is 15%. The FICA–social security tax rate is 6.2% and
the FICA–Medicare tax rate is 1.45%. Calculate the amount of employee taxes withheld and
prepare the company’s journal entry to record the January payroll assuming these were the only
deductions.
182) A company has 90 employees and a weekly payroll of $117,000. The FICA–social security
tax withheld totals $7,254 and the FICA–Medicare tax withheld totals $1,696.50. The total
withholding for federal income tax is $16,500. Prepare the journal entry to accrue this week’s
salaries expense and withholdings.
183) Santa Barbara Express has 4 sales employees, each of whom earns $5,000 per month and is
paid on the last working day of the month. Each employee’s wages are subject to FICA social
security taxes of 6.2% and Medicare taxes of 1.45% on all wages. Withholding for each
employee also includes federal income tax of 16% and monthly medical insurance premiums of
$110 for each employee.
a. Prepare the general journal entry to accrue the monthly sales salaries expense at January 31.
b. The employer payroll taxes for Santa Barbara Express include FICA taxes, federal
unemployment taxes of 0.6% of the first $7,000 paid each employee, and state unemployment
taxes of 5.4% of the first $7,000 paid to each employee. Prepare the journal entry to record the
employer’s payroll taxes at January 31 for Santa Barbara Express. (Assume that none of the
employees has reached the unemployment limit of $7,000.)
184) The payroll records of a company provided the following data for the weekly pay period
ended December 7:
Employee
Earnings
to End of
Previous
Week
Gross
Pay
Federal
Income
Taxes
Medical
Insurance
Deduction
Union
Dues
United
Way
Ronald Arthur
$ 54,000
$1,200
$216
$125
$15
$15
John Baines
40,500
900
162
125
15
30
Ted Carter
45,000
1,000
180
150
-0-
20
The FICA social security tax rate is 6.2% and the FICA Medicare tax rate is 1.45% on all of this
week’s wages paid to each employee. The federal and state unemployment tax rates are 0.6% and
5.4%, respectively, on the first $7,000 paid to each employee. Prepare the journal entries to (a)
accrue the payroll and (b) record payroll taxes expense.
Dec. 7
Salaries and Wages Expense
3,100.00
b.
Dec. 7
Payroll Taxes Expense
185) A company’s payroll for the week ended May 15 included earned salaries of $20,000. All of
that week’s pay is subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45%. In
addition, the company withholds the following amounts for this weekly pay period: $900 for
medical insurance, $3,400 for federal income taxes, and $180 for union dues.
a. Prepare the general journal entry to accrue the payroll.
b. The company is subject to state unemployment taxes at the rate of 5.4% and federal
unemployment taxes at the rate of 0.6%. By May 15, some employees had earned over $7,000,
so only $11,000 of the $20,000 weekly gross pay was subject to unemployment tax. Prepare the
general journal entry to accrue the employer’s payroll tax expense.
186) A company’s employees had the following earnings records at the close of the current
payroll period:
Employees
Earning
through Prior
Pay Period
Earning this
Pay Period
F. Argent….
$11,300
$3,900
A. Garza…….
6,100
2,500
L. Hong……….
9,500
3,100
R. Levinson…
4,800
1,400
J. Young…….
10,000
3,000
The company’s payroll taxes expense on each employee’s earnings includes: FICA Social
Security taxes of 6.2% on the first $128,400 of earnings plus 1.45% FICA Medicare on all
wages; 0.6% federal unemployment taxes on the first $7,000; and 5.4% state unemployment
taxes on the first $7,000. Compute the employer’s total payroll taxes expense for the current pay
period.
FUTA
SUTA
Total employer payroll taxes
$1,201.35
187) An employer has an employee benefit package that includes employer-paid health insurance
and an employer-paid retirement program. The March payroll included contributions of $5,500
for health insurance, and 10% of the employees’ $120,000 gross salaries for the employee
retirement program. Prepare the journal entry to record these employee benefits.
188) A company sells its product subject to a warranty that covers the cost of parts for repairs
during the six months after the date of sale. Warranty costs are estimated to be 5% of sales.
During the month of July, the company performed warranty work and used $11,000 of parts to
perform the warranty work. Sales for July were $450,000.
1. Record the warranty expense for the month of July.
2. Record the costs of the warranty work completed in June.
3. If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31,
what is the account balance at July 31?
189) A company sells tablet computers for $1,300 each. The price includes a two-year warranty.
During the current year, the company sells 400 tablets. On the basis of past experience, the
warranty costs are estimated to be $280 per tablet. The actual warranty costs (paid in cash) by the
company during the current year were $65,000. Prepare general journal entries to record the (a)
estimated warranty expense and (b) warranty repair costs during current year.
190) A company sells sofas with a 6-month warranty. In January, the company sold 100,000
sofas at $1,750 each; and 500 sofas needed repairs during that same month. The total repairs
amounted to $85,000 costs from the upholstery materials inventory. It is estimated that 2% of
all units sold will need repairs under warranty at an estimated cost of $200 per unit. Prepare the
journal entries to record (a) estimated warranty expense for January and (b) warranty repair costs
for January.
191) Early Co. offers its employees a bonus equal to 2% of the company’s net income. The
estimated bonus for the year is $15,686. Prepare the general journal entry to record the estimated
employee bonus plan expense.
192) A company’s employer payroll tax rates are 0.6% for federal unemployment taxes, 5.4% for
state unemployment taxes, 6.2% for FICA social security taxes on earnings up to $128,400, and
1.45% for FICA Medicare taxes on all earnings. Compute the W-2 Wage and Tax Statement
information required below for the following employees:
Employee Gross Earnings Federal Income Taxes
Withheld
A. Baylor ……………………….. $114,000 $17,600
C. Jasmine …………………………. 52,000 8,200
A. Baylor C. Jasmine
W-2 Information: ________ ________
Federal Income Tax Withheld………….. ________ ________
Wages, Tips, Other Compensation……… ________ ________
Social Security Tax Withheld…………… ________ ________
Social Security Wages………………….. ________ ________
Medicare Tax Withheld………………… ________ ________
Medicare Wages………………………… ________ ________
193) The payroll records of a company provided the following data for the current weekly pay
period ended March 12.
Employees
Earnings to
End of
Previous
Week
Gross
Pay
Federal
Income
Taxes
Medical
Insurance
Deduction
Union
Dues
United
Way
D. Hui…….
$ 5,800
$800
$120
$35
$10
$10
B. Kim…….
6,850
1,100
180
35
10
15
C. Sly……
12,900
1,440
404
35
10
40
Assume that the Social Security portion of the FICA taxes is 6.2% on the first $128,400 and the
Medicare portion is 1.45% of all wages paid to each employee for this pay period. The federal
and state unemployment tax rates are 0.6% and 5.4%, respectively, on the first $7,000 paid to
each employee. Calculate the net pay for each employee.
93
194) A company’s payroll information for the month of May follows:
$4,000
5,500
589
138
1,300
415
205
On May 31 the company issued Check No. 4625 payable to the Payroll Bank Account to pay for
the May payroll. It issued payroll checks to the employees after depositing the check.
The federal and state unemployment tax rates are 0.6% and 5.4%, respectively, on the first
$7,000 paid to each employee. The portion of May wages and salaries subject to these taxes
were $6,000.
(1) Prepare the journal entry to record (accrue) the employer’s payroll for May.
(2) Prepare the journal entry to record payment of the May payroll.
(3) Prepare the journal entry to record the employer’s payroll taxes.