E13-9 (Payroll Tax Entries) Green Day Hardware Company's payroll for November 2008 is summarized below:
Unemployment Tax
Payroll Wages Due FICA Federal State
Factory $120,000 $120,000 $40,000 $40,000
Sales 44,000 32,000 4,000 4,000
Admin 36,000 36,000 ------ ------
Total $200,000 $188,000 $44,000 $44,000
At this point in the year some employees have already received wages in excess of those to which payroll taxes apply. Assume that the state unemployment tax is 2.5%. The FICA rate is 7.65% on an employee's wages to $97,500 and 4.45% in excess of $97,500. Of the $188,000 wages subject to FICA tax, $20,000 is in excess of $97,500 related to the sales wages. Federal unemployment tax rate is .8% after credits. Income tax withheld amounts to $16,000 for factory, $7,000 for sales and $6,000 for administrative.
Instructions
a) Prepare a schedule showing the employers total cost of wages for November by function. (Round all computations to the nearest dollar)
b) Prepare journal entries to record the factory, sales, and administrative payrolls including the employers payroll taxes.
Click here for the solution: Green Day Hardware Company's payroll for November 2008 is summarized below
