Question
Blueprint Problem: Payroll Current liabilities related to payroll In many businesses, a major category of current liabilities is related to employee earnings. When employees earnwagesandsalaries,
Blueprint Problem: Payroll
Current liabilities related to payroll
In many businesses, a major category of current liabilities is related to employee earnings. When employees earnwagesandsalaries, those amounts are subject toFICA tax), and Medicare tax. Many states and some cities also require that income taxes be withheld from employee earnings.')" >taxesandother deductionsthat the employer must withhold. The taxes and other deductions that the employer withholds become
SelectliabilitiesassetsCorrect 1 of Item 1for the employer. These amounts are usually classified as
Selectcurrent liabilitiescurrent assetsCorrect 2 of Item 1on the balance sheet.
The employer is also required by law to payemployer taxeson employee earnings. Since these amounts must be paid to government agencies, they areSelectliabilitiesassetsCorrect 3 of Item 1for the employer. These amounts are usually classified asSelectcurrent liabilitiescurrent assetsCorrect 4 of Item 1on the balance sheet.
APPLY THE CONCEPTS: Recording payroll entries The payroll clerk at Tremor, Inc., has used a spreadsheet program to produce a printout of the salaries for May 15.
If an amount box does not require an entry, leave it blank or enter "0".
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Indicate the effect of the journal entries above on the accounting equation. Each row in the table corresponds to the row in the journal.
Accounting Equation | |||||
Row | Assets | = | Liabilities | + | Equity |
1. | Select+-no effectCorrect 1 of Item 3 | Select+-no effectCorrect 2 of Item 3 | Select+-no effectCorrect 3 of Item 3 | ||
2. | Select+-no effectCorrect 4 of Item 3 | Select+-no effectCorrect 5 of Item 3 | Select+-no effectCorrect 6 of Item 3 | ||
3. | Select+-no effectCorrect 7 of Item 3 | Select+-no effectCorrect 8 of Item 3 | Select+-no effectCorrect 9 of Item 3 | ||
4. | Select+-no effectCorrect 10 of Item 3 | Select+-no effectCorrect 11 of Item 3 | Select+-no effectCorrect 12 of Item 3 | ||
5. | Select+-no effectCorrect 13 of Item 3 | Select+-no effectCorrect 14 of Item 3 | Select+-no effectCorrect 15 of Item 3 | ||
6. | Select+-no effectCorrect 16 of Item 3 | Select+-no effectCorrect 17 of Item 3 | Select+-no effectCorrect 18 of Item 3 | ||
7. | Select+-no effectCorrect 19 of Item 3 | Select+-no effectCorrect 20 of Item 3 | Select+-no effectCorrect 21 of Item 3 | ||
9. | Select+-no effectCorrect 22 of Item 3 | Select+-no effectCorrect 23 of Item 3 | Select+-no effectCorrect 24 of Item 3 | ||
10. | Select+-no effectCorrect 25 of Item 3 | Select+-no effectCorrect 26 of Item 3 | Select+-no effectCorrect 27 of Item 3 | ||
11. | Select+-no effectCorrect 28 of Item 3 | Select+-no effectCorrect 29 of Item 3 | Select+-no effectCorrect 30 of Item 3 | ||
12. | Select+-no effectCorrect 31 of Item 3 | Select+-no effectCorrect 32 of Item 3 | Select+-no effectCorrect 33 of Item 3 | ||
13. | Select+-no effectCorrect 34 of Item 3 | Select+-no effectCorrect 35 of Item 3 | Select+-no effectCorrect 36 of Item 3 |
The total cost of labor for Tremor, Inc., for this period is $
In the future, as each of the payroll liabilities are paid, the liability will beSelectcrediteddebitedCorrect 2 of Item 4and Cash will beSelectcrediteddebitedCorrect 3 of Item 4
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