Kipley Company is a small manufacturing firm located in Pittsburgh, Pennsylvania. The company has a workforce of both hourly and salaried employees. Each employee is paid for hours actually worked during each week, with the time worked being recorded in quarter-hour increments. The standard workweek consists of 40 hours, with all employees being paid time and one-half for any hours worked beyond the 40 regular hours.

Wages are paid every Friday, with one week’s pay being held back by the company. Thus, the first payday for Kipley Company is January 14 for the workweek ending January 8 (Saturday).

Below is the information provided from the payroll register of Kipley Company, Inc.

 

a. Prepare the journal entries as of January 12 to record the payroll and the payroll taxes for the week ending January 8. Credit Salaries Payable for the total net pay.

Use the following tax rates and bases: employer’s FICA—OASDI, 6.2% on the first $113,700; employer’s FICA—HI, 1.45% on total earnings; FUTA, 0.6% on the first $7,000; and SUTA, 3.6785% on the first $8,500.

For a compound transaction, if an amount box does not require an entry, leave it blank. If required, round your answers to the nearest cent.

b. Prepare the journal entry to record the payment of the payroll on January 14 when the paychecks are distributed to all workers. If required, round your answers to the nearest cent.

 

KIPLEY COMPANY, INC. Payroll Register Time Card No. Name GRP. INS. HEALTH INS. CK. NO. AMT. 11 Carson, F. $0.85 $1.65 313 $219.13 12 Wilson, W. 0.85 1.65 314 238.54 13 Utley, H. 0.85 1.65 315 219.37 21 Fife, L. 0.85 1.65 316 281.23 22 Smith, L. 1.65 317 295.57 31 Fay, G. 0.85 1.65 318 411.30 32 Robey, G. 0.85 1.65 319 285.72 33 Schork, T. 1.65 320 358.88 51 Hardy, B. 0.85 1.65 321 312.98 99 Kipley, C. 0.85 1.65 322 755.60 Totals $6.80 $16.50 $3,378.32