P11-5A

Prepare entries for payroll and payroll taxes; prepare W-2 data.

(LO 3)

For the year ended December 31, 2017, Denkinger Electrical Repair Company reports the following summary payroll data.

Gross earnings:
Administrative salaries	$200,000
Electricians' wages	370,000
Total	$570,000
Deductions:
FICA taxes	$ 38,645
Federal income taxes withheld	174,400
State income taxes withheld (3%)	17,100
United Fund contributions payable	27,500
Health insurance premiums	17,200
Total	$274,845

Denkinger Company's payroll taxes are Social Security tax 6.2%, Medicare tax 1.45%, state unemployment 2.5% (due to a stable employment record), and 0.8% federal unemployment. Gross earnings subject to Social Security taxes of 6.2% total $490,000, and gross earnings subject to unemployment taxes total $135,000.

Instructions

(a)

Prepare a summary journal entry at December 31 for the full year's payroll.

Salaries and wages payable $295,155

(b)

Journalize the adjusting entry at December 31 to record the employer's payroll taxes.

Payroll tax expense $43,100

(c)

The W-2 Wage and Tax Statement requires the following dollar data.

Wages, Tips, Other Compensation

Federal Income Tax Withheld

State Income Tax Withheld

FICA Wages

FICA Tax Withheld

Complete the required data for the following employees.

Employee	Gross Earnings	Federal Income Tax Withheld
Maria Sandoval	$59,000	$28,500
Jennifer Mingenback	26,000	10,200