Question

Headland Company pays its office employee payroll weekly. Below is a partial list of employees and their payroll data for August. Because August is their vacation period, vacation pay is also listed. Vacation Pay to Earnings to Weekly Be Received Employee July 31 Pay in August Mark Hamill $5,320 $290Karen Robbins 4,620 240 $480Brent Kirk 3,820 200 400Alec Guinness 8,520 340Ken Sprouse 9,120 420 840 Assume that the federal income tax withheld is 10% of wages. Union dues withheld are 2% of wages. Vacations are taken the second and third weeks of August by Robbins, Kirk, and Sprouse. The state unemployment tax rate is 2.5% and the federal is 0.8%, both on a $8,120 maximum. The FICA rate is 7.65% on employee and employer on a maximum of $107,920 per employee. In addition, a 1.45% rate is charged both employer and employee for an employee’s wages in excess of $107,920.

Make the journal entries necessary for each of the four August payrolls. The entries for the payroll and for the company’s liability are made separately. Also make the entry to record the monthly payment of accrued payroll liabilities.

Answer 1

accumulated to July 31 Weekly Pay Vacation Pay

Mark Hamill $5,320 $290

Karen Robbins $4,620 $240 $480

Brent Kirk $3,820 $200 $400

Alec Guinness $8,520 $340

Ken Sprouse $9,120 $420 $840

Entries for wages expenses:

Weeks 1 and 4:

Dr Wages expense 1,490

Cr Federal income tax withholdings payable 149

Cr FICA taxes withholdings payable 113.99

Cr Union dues withholdings payable 29.80

Cr Cash 1,197.21

Weeks 2 and 3:

Dr Wages expense 630

Dr vacation wages expense 860

Cr Federal income tax withholdings payable 149

Cr FICA taxes withholdings payable 113.99

Cr Union dues withholdings payable 29.80

Cr Cash 1,197.21

Entries for wages expenses:

Weeks 1, 2, 3 and 4:

Dr FICA tax expense 113.99

Dr FUTA tax expense 5.84

Dr SUTA tax expense 18.25

Cr FICA tax payable 113.99

Cr FUTA tax payable 5.84

Cr SUTA tax payable 18.25

Since taxes and other expenses are paid once a month, the journal entry to record their payment:

Dr Federal income tax withholdings payable 596

Dr FICA tax payable 455.96

Dr FICA taxes withholdings payable 455.96

Dr Union dues withholdings payable 119.20

Dr FUTA tax payable 23.36

Dr SUTA tax payable 73

Cr Cash 1,723.48