Journalizing payroll and payroll tax entries. The date and instructions given below relate to Salters, Inc., for the month of July 19X5. The beginning credit balance of the Factory Payroll Clearing account on July 1 was $10,860, -

representing unpaid wages earned by employees during the last three days of June.

Instructions 1. Set up a Factory Payroll Clearing account and enter the beginning balance.

2. Journalize the summary of weekly and semimonthly payroll paid during the month. Use the account titles in your textbook with the data shown here.

Total gross wages $72,370 Income taxes withheld $8,684 FICA taxes withheld 5,065 Group insurance deductions 1,440 3. Journalize the charging of labor costs to production. The summary of factory wages for the month shows $56,188 for direct labor and $20,796 for indirect labor.

4. Journalize the employer's payroll taxes. Assume a federal unemployment tax rate of .8 percent and a net state unemployment tax rate of 4.1 percent. The employer’s FICA taxes were $5,065. The wages subject to unemployment taxes were

$52/110:

5. Post the journal entries to the Factory Payroll Clearing account.

6. Explain where the balance of the Factory Payroll Clearing account on July 31 is shown on the financial statements.