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# Payroll Tax Entries

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Allison Hardware Company's payroll for November 2010 is summarized below.

Amount Subject to Payroll Taxes
Unemployment Tax
Payroll Wages Due F.I.C.A Federal State
Factory \$140,000 \$140,000 \$40,000 \$40,000
Sales 32,000 32,000 4,000 4,000
Total \$208,000 \$208,000 \$44,000 \$44,000

At this point in the year some emplyees have already received wages in excess of those to which payroll
taxes apply. Assume that the state unemployment tax is 2.5%. The F.I.C.A. rate is 7.65% on an employee's
wages to \$102,000 and 1.45% in excess of \$102,000. Of the \$208,000 wages subject to F.I.C.A. tax, \$20,000
of the sales wages is in excess of \$102,000. Federal unemployment tax rate is 0.8% 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 employer's total cost of wages for November by function.
b. Prepare the journal entries to record the factory, sales, and administrative payrolls including the employer's payroll taxes.