eBook

Payroll Accounts and Year-End Entries

The following accounts, with the balances indicated, appear in the ledger of Garcon Co. on December 1 of the current year:

211	Salaries Payable
212	Social Security Tax Payable	$17,442
213	Medicare Tax Payable	4,590
214	Employees Federal Income Tax Payable	28,305
215	Employees State Income Tax Payable	27,540
216	State Unemployment Tax Payable	2,907
217	Federal Unemployment Tax Payable	918
218	Retirement Savings Deductions Payable	7,000
219	Medical Insurance Payable	53,200
411	Operations Salaries Expense	1,853,000
511	Officers Salaries Expense	1,209,000
512	Office Salaries Expense	308,000
519	Payroll Tax Expense	263,160

The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December:

Dec. 2

Issued Check No. 410 for $7,000 to Jay Bank to invest in a retirement savings account for employees.

2

Issued Check No. 411 to Jay Bank for $50,337 in payment of $17,442 of social security tax, $4,590 of Medicare tax, and $28,305 of employees' federal income tax due.

13

Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:

Salary distribution:
Operations	$85,000
Officers	54,000
Office	14,000	$153,000
Deductions:
Social security tax	$9,180
Medicare tax	2,295
Federal income tax withheld	28,305
State income tax withheld	6,885
Retirement savings deductions	3,500
Medical insurance deductions	8,874	59,039
Net amount		$93,961

13

Issued Check No. 420 in payment of the net amount of the biweekly payroll to fund the payroll bank account.

13

Journalized the entry to record payroll taxes on employees' earnings of December 13: social security tax, $9,180; Medicare tax, $2,295; state unemployment tax, $730; federal unemployment tax, $240.

16

Issued Check No. 424 to Jay Bank for $51,255, in payment of $18,360 of social security tax, $4,590 of Medicare tax, and $28,305 of employees' federal income tax due.

19

Issued Check No. 429 to Sims-Walker Insurance Company for $53,200, in payment of the semiannual premium on the group medical insurance policy.

27

Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:

Salary distribution:
Operations	$82,000
Officers	54,000
Office	13,000	$149,000
Deductions:
Social security tax	$8,940
Medicare tax	2,235
Federal income tax withheld	27,267
State income tax withheld	6,705
Retirement savings deductions	3,500	48,647
Net amount		$100,353

27

Issued Check No. 541 in payment of the net amount of the biweekly payroll to fund the payroll bank account.

27

Journalized the entry to record payroll taxes on employees' earnings of December 27: social security tax, $8,940; Medicare tax, $2,235; state unemployment tax, $365; federal unemployment tax, $120.

27

Issued Check No. 543 for $41,130 to State Department of Revenue in payment of employees' state income tax due on December 31.

31

Issued Check No. 545 to Jay Bank for $7,000 invest in a retirement savings account for employees.

31

Paid $80,000 to the employee pension plan. The annual pension cost is $104,000. (Record both the payment and unfunded pension liability.)

Required:

1. Journalize the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. For December 16th transactions, (a.) record the payroll and (b.) payment of salaries. For December 30th transactions, (a.) record the payroll, (b.) payment of salaries, (c.) record the taxes, and (d.) payment of taxes.

2a. Journalize the following adjusting entry on December 31. Salaries accrued: operations salaries, $8,200; officers salaries, $5,400; office salaries, $1,300. The payroll taxes are immaterial and are not accrued. For a compound transaction, if an amount box does not require an entry, leave it blank.