187.
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%
of the first $118,500 of earnings each calendar year and the FICA—Medicare tax rate is
1.45% of all earnings. 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.
188.
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, assuming no employees have exceeded the
maximum taxable earnings for FICA—Social Security.
9-123
189.
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% of the first $118,500 of earnings each calendar year and
Medicare taxes of 1.45% of all earnings. 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 4.0% 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.)
190.
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% on the first $118,500 of earnings each calendar
year and the FICA Medicare tax rate is 1.45% on all earnings. The federal and state
unemployment tax rates are 0.8% 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.
9-126
191.
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% on the first $118,500 of
earnings each calendar year and Medicare taxes of 1.45% on all earnings. 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 2% 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.
No employees had earned over $118,500. Prepare the general journal entry to accrue the
employer’s payroll tax expense.
192.
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 $118,500 of earnings plus 1.45% FICA Medicare on all
earnings; 0.6% federal unemployment taxes on the first $7,000; and 2.5% state
unemployment taxes on the first $7,000. Compute the employer’s total payroll taxes
expense for the current pay period.
193.
An employer has an employee benefit package that includes employer-paid health
insurance and an employer-paid retirement program. During March, the employer paid
$5,500 for health insurance, and contributed to the employee retirement program 10% of
the employees’ $120,000 gross salaries. Prepare the journal entry to record these
employee benefits.
194.
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 June 30?
195.
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 repair 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.
196.
A company sells sofas with a 6-month warranty. It is estimated that 2% of all units sold
will need repairs under warranty at an estimated cost of $200 per unit. 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. Prepare the journal entries to record (a) estimated warranty expense for
January and (b) warranty repair costs for January.
197.
Early Co. offers its employees a bonus equal to 2% of the company’s net income. The
estimated pre-bonus net income for the year is expected to be $800,000. Prepare the
general journal entry to record the estimated employee bonus plan expense.
9-133
198.
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 $118,500
per calendar year, 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
________
________
W-2 Information:
199.
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 $118,500 of
earnings per calendar year 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 0.8% and
5.4%, respectively, on the first $7,000 paid to each employee. Calculate the net pay for
each employee.
A. Hui
B. Kim
84.15
200.
The payroll record of a company provided the following data for the current weekly pay
period ended March 12 for employee R. Gold.
Earnings
to End
of
Previous
Week
March
12
Gross
Pay
Federal
Income
Taxes
Medical
Insurance
Deduction
Union
Dues
$83,550
$1,725
$207
$35
$15
The Social Security portion of the FICA taxes is 6.2% on the first $118,500 per calendar
year and the Medicare portion is 1.45% of all wages paid. The federal and state
unemployment tax rates are 0.8% and 5.4%, respectively, on the first $7,000 paid to each
employee. Calculate the net pay for R. Gold.
9-137
201.
A company’s payroll information for the month of May follows:
Administrative salaries
$4,000
Sales salaries
5,500
FICA-Social Security taxes withheld
589
FICA-Medicare taxes withheld
138
Federal income taxes withheld
1,300
Medical insurance premiums withheld
415
Union dues withheld
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.
(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. The federal and state
unemployment tax rates are 0.6% and 5.4%, respectively, on the first $7,000 paid to each
employee. The wages and salaries subject to these taxes were $6,000. (3) Prepare the
journal entry to record the employer’s payroll taxes.
Sales Salaries Expense
202.
Cardinal Company sells merchandise for $24,000 cash on March 31 (cost of merchandise
is $12,300). The sales tax law requires Cardinal to collect 8.5% sales tax on every dollar of
merchandise sold. Record the entry for the sale and its applicable sales tax.