Question

Stadium Manufacturing has the following data available for its September 30, 2019, payroll:

Wages earned	$246,000	*
Federal income taxes withheld	62,200

* All subject to Social Security and Medicare matching and withholding of 6.2% and 1.45%, respectively.

Federal unemployment taxes of 0.80% and state unemployment taxes of 1.20% are payable on $231,000 of the wages earned. Paychecks won’t be written until Oct 5.

1.Prepare the Sept 30 journal entry for wages and withholdings .

2. Prepare the Sept 30 journal entry for payroll taxes.

Ellsworth Enterprises borrowed $425,000 on an 8%, interest-bearing note on September 30, 2020. Ellsworth ends its fiscal year on December 31. The note was paid with interest on May 31, 2021.

1.Prepare the entry for this note on September 30, 2020.

2. Prepare the adjusting entry for this note on December 31, 2020.

3. Prepare the entry to record the repayment of the note on May 31, 2021.

Answer 1

A 1.   

SEP 30	WAGES A/C DR	246000
	FEDERAL INCOME TAX PAYABLE		62200
	SOCIAL SECURITY WITH HELD		15252
	MEDICARE WITHHELD		3567
	WAGES PAYABLE		164981

2.

SEP 30	Federal unemployment tax Exp	1848
	State unemployment Exp	2772
	Federal unemployment tax Payable		1848
	State unemployment tax Payable		2772

B  

SEP 30	CASH A/C DR	425000
	8% NOTE PAYABLE		425000
DEC 31	INTEREST EXP	8500		(425000*8%)*3/12
	INTEREST PAYABLE		8500
MAY 31	8% NOTE PAYABLE	425000
	INTEREST PAYABLE	8500
	INTEREST	14167		(425000*8%)*5/12
	CASH		447667