The following information about the payroll for the week ended December 30 was obtained from the records of Pharrell Co.: Salaries: Sales salaries $325,000 Warehouse salaries 196,000 Office salaries 131,000 $652,000 Deductions: Income tax withheld $119,000 Social security tax withheld 39,120 Medicare tax withheld 9,780 Retirement savings 14,344 Group insurance 11,736 $193,980 Tax rates assumed: Social security 6% Medicare 1.5% State unemployment (employer only) 5.4% Federal unemployment (employer only) 0.6% Required: 1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries (refer to the Chart of Accounts for exact wording of account titles):
CHART OF ACCOUNTS |
Pharrell Co. |
General Ledger |
| ASSETS | 110 | Cash | 111 | Accounts Receivable | 112 | Interest Receivable | 113 | Notes Receivable | 115 | Merchandise Inventory | 116 | Supplies | 118 | Prepaid Insurance | 120 | Land | 123 | Building | 124 | Accumulated Depreciation-Building | 125 | Office Equipment | 126 | Accumulated Depreciation-Office Equipment | | LIABILITIES | 210 | Accounts Payable | 213 | Interest Payable | 214 | Notes Payable | 215 | Salaries Payable | 216 | Social Security Tax Payable | 217 | Medicare Tax Payable | 218 | Employees Income Tax Payable | 220 | Group Insurance Payable | 221 | Retirement Savings Payable | 222 | Union Dues Payable | 224 | Federal Unemployment Tax Payable | 225 | State Unemployment Tax Payable | 226 | Vacation Pay Payable | 227 | Unfunded Pension Liability | | EQUITY | 310 | Owner, Capital | 311 | Owner, Drawing | 312 | Income Summary | | | REVENUE | 410 | Sales | 610 | Interest Revenue | | EXPENSES | 510 | Cost of Merchandise Sold | 520 | Sales Salaries Expense | 521 | Warehouse Salaries Expense | 522 | Office Salaries Expense | 524 | Depreciation Expense-Building | 525 | Delivery Expense | 526 | Repairs Expense | 529 | Selling Expenses | 531 | Rent Expense | 532 | Depreciation Expense-Office Equipment | 533 | Insurance Expense | 534 | Supplies Expense | 535 | Payroll Tax Expense | 536 | Vacation Pay Expense | 537 | Pension Expense | 538 | Cash Short and Over | 540 | Miscellaneous Expense | 710 | Interest Expense | |
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, $44,000 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 (refer to the Chart of Accounts for exact wording of account titles): A. On page 11 of the journal: December 30, to record the payroll. B. On page 12 of the journal: January 5, to record the employerâs payroll taxes on the payroll to be paid on January 5. Because it is a new fiscal year, all salaries are subject to unemployment compensation taxes.