P3-10 Summary of payroll procedures Megerle Custom Cabinet Co. uses the job order cost system. In recording payroll transactions, the following accounts are used:

Cash

Wages Payable

FICA Tax Payable

Federal Unemployment Tax Payable

State Unemployment Tax Payable

Employees Income Tax Payable

Payroll

Administrative Salaries

Miscellaneous Administrative Expense

Sales Salaries

Miscellaneous Selling Expense

Factory Overhead

Work in Process

Factory employees are paid weekly, while all other employees are paid semimonthly on the fifteenth and the last day of each month. All salaries and wages are subject to all taxes. The income tax withheld amounts to 10% of gross wages.

Following is a narrative of transactions completed during January:

Jan.7 Recorded total earnings of factory employees amounting to $68,200, less deductions for employees income taxes and FICA taxes.

7 Issued check for payment of the payroll.

14 Recorded total earnings of factory employees amounting to $66,300, less deductions for employees income taxes and FICA taxes.

14 Issued check for payment of the payroll.

15 Recorded administrative salaries, $10,000, and sales salaries, $18,000, less deductions for employees income taxes and FICA taxes.

15 Issued check for payment of the salaries.

21 Recorded total earnings of factory employees amounting to $72,500, less deductions for employees income taxes and FICA taxes.

21 Issued check for payment of the payroll.

28 Recorded total earnings of factory employees amounting to $74,200, less deductions for employees income taxes and FICA taxes.

28 Issued check for payment of the payroll.

31 Recorded administrative salaries, $10,000, and sales salaries, $18,000, less deductions for employees income taxes and FICA taxes.

31 Issued check for payment of the salaries.

31 The following wages and salaries were earned or accrued during January:

Direct labor .....................................................................................$302,500

Indirect labor ...................................................................................22,500

Administrative salaries.....................................................................20,000

Sales salaries...................................................................................36,000

Megerle Custom Cabinet Co. used the following form to com- pute the amount of payroll taxes incurred:

Items Taxable earnings FICA Tax Federal Unemployment tax State Unemployment tax Total Payroll Taxes

Factory wages.......

Administrative salaries....

Sales salaries............. _________ ________ __________ ___________ __________

Total............................ _________ _________ _________ __________ __________

3. Prepare the journal entry to distribute payroll taxes, assuming that the payroll taxes imposed on the employer for factory wages are to be charged to Factory Overhead, the taxes for administrative salaries are to be charged to Miscellaneous Administrative Expense, and the taxes for sales salaries are to be charged to Miscellaneous Selling Expense.

4. Assume that the factory employees worked on January 29, 30, and 31. What was the amount of accrued wages on January 31? (Hint: Assume that there were no accrued wages at the beginning of the month.)