Question

During January, the following selected transactions occurred.

Jan. 5 Sold merchandise for cash totaling $20,520, which includes 8% sales taxes. 12 Performed services for customers who had made advance payments of $12,000. (Credit Service Revenue.)
During January, the company’s employees earned wages of $52,000. Withholdings related to these wages were $3,978 for Social Security (FICA), $5,686 for federal income tax, and $1,706 for state income tax. The company owed no money related to these earnings for federal or state unemployment tax. Assume that wages earned during January will be paid during February. No entry had been recorded for wages or payroll tax expenses as of January 31.
Journalize the January transactions.

Answer 1

The journal entries are given as follows;

Step-by-step explanation:

Jan 5

Cash Dr.$20,520

Sales Tax Payable 20,520-(20,520/1.08) Cr.$1,520

Inventory Cr.$19,000

Unearned Service Revenue Dr.$12,000

Service Revenue Cr.$12,000

Employee payroll Expense Dr.$452,000

Social Security payable Cr.$3,978

Federal Income Tax payable Cr.$5,686

State Income Tax payable Cr.$1,706

payroll Expenses payable (452,000-3,978-5,686-1,706) Cr.$440,630