The following information about the payroll for the week ended December 30 was obtained from the records of Qualitech Co.:

Salaries:
Sales salaries	$325,000
Warehouse salaries	196,000
Office salaries	131,000
	$652,000
Deductions:
Income tax withheld	$119,000
Social security tax withheld	39,120
Medicare tax withheld	9,780
U.S. savings bonds	14,344
Group insurance	11,736
	$193,980
Tax rates assumed:
Social security	6%
Medicare	1.5%
State unemployment (employer only)	5.4%
Federal unemployment (employer only)	0.8%

Required:

1.

Assuming that the payroll for the last week of the year is to be paid on December 31, 2015, journalize the following entries (refer to the Chart of Accounts for exact wording of account titles):

A.	December 30, 2015, to record the payroll. Include the year when enter the date in the journal.
B.	December 30, 2015, 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, $44,000 is subject to unemployment compensation taxes. Include the year when enter the date in the journal.

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 exact wording of account titles):

A.	On page 11 of the journal: December 30, 2015, to record the payroll. Include the year when enter the date in the journal.
B.	On page 12 of the journal: January 5, 2016, to record the employer's payroll taxes on the payroll to be paid on January 5, 2016. Because it is a new fiscal year, all $652,000 in salaries is subject to unemployment compensation taxes. Include the year when enter the date in the journal.

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Chart of Accounts

CHART OF ACCOUNTS

Qualitech Co.

General Ledger

	ASSETS
110	Cash
111	Accounts Receivable
112	Interest Receivable
113	Notes Receivable
115	Merchandise Inventory
116	Supplies
118	Prepaid Insurance
120	Land
123	Building
124	Accumulated Depreciation-Building
125	Office Equipment
126	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
213	Interest Payable
214	Notes Payable
215	Salaries Payable
216	Social Security Tax Payable
217	Medicare Tax Payable
218	Employees Income Tax Payable
220	Group Insurance Payable
221	Bond Deductions Payable
222	Union Dues Payable
223	Retirement Savings Deductions Payable
224	Federal Unemployment Tax Payable
225	State Unemployment Tax Payable
226	Vacation Pay Payable
227	Unfunded Pension Liability

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends
313	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Sales Salaries Expense
521	Warehouse Salaries Expense
522	Office Salaries Expense
524	Depreciation Expense-Building
525	Delivery Expense
526	Repairs Expense
529	Selling Expenses
531	Rent Expense
532	Depreciation Expense-Office Equipment
533	Insurance Expense
534	Supplies Expense
535	Payroll Tax Expense
536	Vacation Pay Expense
537	Pension Expense
538	Cash Short and Over
540	Miscellaneous Expense
710	Interest Expense

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Journal

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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 exact wording of account titles):

A.	December 30, to record the payroll. Include the year when enter the date in the journal.
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, $44,000 is subject to unemployment compensation taxes. Include the year when enter the date in the journal.

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JOURNAL

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Explanation

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 exact wording of account titles):

A.	On page 11 of the journal: December 30, 2015, to record the payroll. Include the year when enter the date in the journal.
B.	On page 12 of the journal: January 5, 2016, to record the employer's payroll taxes on the payroll to be paid on January 5, 2016. Because it is a new fiscal year, all $652,000 in salaries is subject to unemployment compensation taxes. Include the year when enter the date in the journal.

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JOURNAL

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Solution

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