Share
Explore BrainMass

Journalizing Payroll and Payroll Tax Entries

The following summary data for the payroll period ended December 27, 2008, are available for Cayman Coating Co.:

Gross pay...............................................$53,000
FICA tax withholdings............................. ?
Income tax withholdings.........................$7,680
Group hospitalization insurance..............$960
Employee contributions to pension plan..... ?
Total deductions.........................................$14,088
Net pay.......................................................?

Additional Information:

- FICA tax rates are 7.65% on the first $97,500 of each employee's annual earnings and 1.45% on any earnings in excess of $97,500. However, no employees had accumulated earnings for the year in excess of the $97,500 limit. The FICA tax rates are levied against both employers and employees.

- The federal and state unemployment compensation tax rates are 0.8% and 5.4%, respectively. These rates are levied against the employer for the first $7,000 of each employee's annual earnings. Only $7,500 of the gross pay amount for the December 27, 2008, pay period was owed to employees who were still under the annual limit.

Required:

Assuming that Cayman Coating Co.'s payroll for the last week of the year is to be paid on January 3, 2009, use the horizontal model (or write the journal entry) to record the effects of the December 27, 2008, entries for

a. Accrued payroll
b. Accrued payroll taxes

Solution Preview

a.

Dec. 27 Payroll Expense 53,000.00
FICA Tax Withheld 4,054.50 ($53,000*.0765)
Income Tax Withheld ...

Solution Summary

The following summary data for the payroll period ended December 27, 2008, are available for Cayman Coating Co.:

Gross pay...............................................$53,000
FICA tax withholding......................................... ?
Income tax withholding..............................$7,680
Group hospitalization insurance.....................$960
Employee contributions to pension plan.............. ?
Total deductions.........................................$14,088
Net pay...............................................................?

Additional Information:

- FICA tax rates are 7.65% on the first $97,500 of each employee's annual earnings and 1.45% on any earnings in excess of $97,500. However, no employees had accumulated earnings for the year in excess of the $97,500 limit. The FICA tax rates are levied against both employers and employees.

- The federal and state unemployment compensation tax rates are 0.8% and 5.4%, respectively. These rates are levied against the employer for the first $7,000 of each employee's annual earnings. Only $7,500 of the gross pay amount for the December 27, 2008, pay period was owed to employees who were still under the annual limit.

Required:

Assuming that Cayman Coating Co.'s payroll for the last week of the year is to be paid on January 3, 2009, use the horizontal model (or write the journal entry) to record the effects of the December 27, 2008, entries for

a. Accrued payroll
b. Accrued payroll taxes

$2.19