In preparing for next year, on December 1, Thad Feldman hired two hourly employees to assist with some troubleshooting and repair work.

More information:

Dec. 7 Paid employee wages: Lance Kumm, 38 hours, and Anthony Hall, 42 hours.
Dec. 14 Paid employee wages: Lance Kumm, 25 hours, and Anthony Hall, 36 hours.
Dec. 21 Paid employee wages: Lance Kumm, 26 hours, and Anthony Hall, 35 hours.

a. The following accounts have been added to the chart of accounts: Wages Payable #2010, FICA OASDI Payable #2020, FICA Medicare Payable #2030, FIT Payable #2040, State Income Tax Payable #2050, FUTA Tax Payable #2060, SUTA Tax Payable #2070, Wages Expense #5110, and Payroll Tax Expense #5120.
b. Assume FICA OASDI is taxed at 6.2% up to $117,000 in earnings, and Medicare is taxed at 1.45% on all earnings.
c. State income tax is 2% of gross pay.
d. None of the employees has federal income tax taken out of his or her pay.
e. Each employee earns $10 an hour and is paid 1 12 times salary for hours worked in excess of 40 weekly.

As December comes to an end, Thad Feldman wants to take care of his payroll obligations. He will complete Form 941 for the fourth quarter of the current year and Form 940 for federal unemployment taxes. Thad will make the necessary deposits and payments associated with his payroll.

Assignment
1. Prepare the payroll register for the three pay periods.
2. Using the payroll registers, record the December payrolls and the payment of the payrolls in the general journal and post them to the general ledger.
3. Using the payroll registers, record payroll tax expense for the fourth quarter in the general journal. Use December 31 as the date of the journal entry to record the payroll tax expense for the entire quarter. The FUTA tax ceiling is $7,000, and the SUTA tax ceiling is $7,000 in cumulative wages for each employee. The Smith Computer Center’s FUTA rate is 0.6% and the SUTA rate is 2.5%. Post the entry to the general ledger.
4. Record the payment of each tax liability in the general journal and post each entry to the general ledger. Smith Computer Center is classified as a monthly depositor. The company wishes to pay all payroll taxes on December 31 even if no deposits are required.
5. Prepare Form 941 for the fourth quarter. Smith Computer Center’s employer identification number is 35-4132588.
6. Complete Form 940 for Smith Computer Center. The state reporting number is 025-025-2.