The following information about the payroll for the week ended December 30 was obtained from the records of Pharrell Co.: Salaries: Sales salaries $335,000 Warehouse salaries 186,000 Office salaries 144,000 $665,000 Deductions: Federal income tax withheld $116,800 Social security tax withheld 39,900 Medicare tax withheld 9,975 Retirement savings 14,630 Group insurance 11,970 $193,275 Tax rates assumed: Social security 6% Medicare 1.5% State unemployment (employer only) 5.4% Federal unemployment (employer only) 0.6% State unemployment (employer only) 5.4% Federal unemployment (employer only) 0.6% Required: 1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries (refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered): a. December 30, to record the payroll. b. December 30, to record the employer's payroll taxes on the payroll to be paid on December 31. Of the total payroll for the last week of the year, $38,000 is subject to unemployment compensation taxes. 2. Assuming that the payroll for the last week of the year is to be paid on January 5 of the following fiscal year, journalize the following entries (refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered): a. On page 11 of the journal: December 30, to record the payroll. b. On page 12 of the journal: January 5, to record the employer's payroll taxes on the payroll to be paid on January 5. Because it is a new fiscal year, all salaries are subject to unemployment compensation taxes. Pharrell Co. General Ledger ASSETS REVENUE 110 Cash 410 Sales 111 Accounts Receivable 610 Interest Revenue 112 Interest Receivable 113 Notes Receivable EXPENSES 115 Merchandise Inventory 510 Cost of Merchandise Sold 116 Supplies 520 Sales Salaries Expense 118 Prepaid Insurance 521 Warehouse Salaries Expense 120 Land 522 Office Salaries Expense 123 Building 524 Depreciation Expense-Building 124 Accumulated Depreciation-Building 525 Delivery Expense 125 Office Equipment 526 Repairs Expense 529 Selling Expenses 126 Accumulated Depreciation Office Equipment 531 Rent Expense LIABILITIES 532 Depreciation Expense-Office Equipment 210 Accounts Payable 533 Insurance Expense 213 Interest Payable 534 Supplies Expense 214 Notes Payable 535 Payroll Tax Expense 215 Salaries Payable 536 Vacation Pay Expense 216 Social Security Tax Payable 537 Pension Expense 217 Medicare Tax Payable 538 Cash Short and Over 218 Employees Federal Income Tax Payable 540 Miscellaneous Expense Scroll down to access additional pages of the journal. 1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries (refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered): a. December 30, to record the payroll. b. December 30, to record the employer's payroll taxes on the payroll to be paid on December 31. Of the total payroll for the last week of the year, $38,000 is subject to unemployment compensation taxes. PAGE 11 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 7 8 9 10 11 10 11 12 13 2. Assuming that the payroll for the last week of the year is to be paid on January 5 of the following fiscal year, journalize the following entries (refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered): a. On page 11 of the journal: December 30, to record the payroll. PAGE 11 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5 6 7 3 4 5 6 7 8 9 b. On page 12 of the journal: January 5, to record the employer's payroll taxes on the payroll to be paid on January 5. Because it is a new fiscal year, all salaries are subject to unemployment compensation taxes. PAGE 12 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5
