Information related to Payroll:

Payroll is paid monthly on the last day of each month. Therefore, theres no accrual for payroll.

Gross pay for direct labor goes to Finished Goods or Work in Process if appropriate.

Salaries for non-factory workers go to the appropriate salary expense accounts.

The companys salesperson works on 10% straight commission of sales during the month.

Federal Withholding Tax is 15% of gross pay for everyone and is recorded whenever gross pay is recorded. FWT is remitted monthly for the previous month.

There are no deductions for state or local withholding tax.

FICA tax rate is 7.65% of gross pay. (FICA is Social Security and Medicare.) Since this is the first month of the new year, no one will reach the Social Security limit. FICA is remitted monthly for the previous month.

FUTA tax rate is 0.8% of gross wages with no limit. SUTA tax rate is 1.45% of gross wages with no limit. FUTA and SUTA are paid yearly in January (for the previous year).

There are no other miscellaneous deductions, such as union dues.

All employer payroll taxes (employers portion of FICA, FUTA, and SUTA) are recorded on the last day of the month.

Employer payroll taxes related to factory workers go to Factory Overhead. Employer payroll taxes related to all non-factory workers go to Payroll Tax Expense.

Factory Overhead is applied to each job at 25% of direct labor costs for that job.

Debits to Factory Overhead represent actual overhead, and credits represent applied overhead. The difference between actual and applied factory overhead is insignificant and should be closed out to Cost of Goods Sold as an adjusting entry at the end of each month.

journalize the following entries.

Jan15Assign Job 76 to Cold Refrigeration for the purchase of a refrigeration system. The start date will be January 16. The completion date will be no later than February 28. The estimated direct material is $9,175.00. The estimated indirect material is $1,860.00. The estimated direct labor is $15,600.00. The contract amount is $45,800.00. A deposit of $10,000.00 was provided by Cold Refrigeration in signing the contract. The deposit is unearned revenue. Half of the contract will be billed upon 50% completion with the deposit applied against that billing with the remaining amount due immediately. A quarter of the contract will be billed upon 75% completion of the contract with the amount due immediately. The remaining amount of the contract is to be billed when the job is 100% complete and is payable within 30 days of the billing.

Jan 28Apply from direct materials requisition $4,600.00 of direct materials. Apply from indirect materials requisition $950.00 of indirect materials. Apply $8,000.00 (from time cards) of direct labor and factory overhead to Job 76, completing 50% of the job. Factory overhead is based on 25% of direct labor cost. Transfer the partially completed job from Direct Material and Indirect Material to WIP. When making the journal entry for applying direct labor, debit WIP for the gross pay and credit FWT Payable and FICA Tax Payable for the appropriate amounts with the net pay going to Salaries Payable. Set up the accounts receivable and bill Cold Refrigeration for 50% of the contract on account, applying the initial $10,000.00 deposit against the billing.