Question

Townson Company had gross wages of $180,000 during the week ended December 10. All earnings are...

Townson Company had gross wages of $180,000 during the week ended December 10. All earnings are subject to social security tax, while the amount of wages subject to federal and state unemployment taxes was $24,000. Tax rates are as follows:

Social security 6.0%
Medicare 1.5%
State unemployment 5.3%
Federal unemployment 0.8%

The total amount withheld from employee wages for federal income taxes was $32,000.

Required:
(a) Journalize the entry to record the payroll for the week of December 10.*
(b) Journalize the entry to record the payroll tax expense incurred for the week of December 10.*
*Refer to the Chart of Accounts for exact wording of account titles. If required, round your answers to the nearest cent.
CHART OF ACCOUNTS
Townson Company
General Ledger
ASSETS
110 Cash
111 Accounts Receivable
112 Interest Receivable
113 Notes Receivable
115 Inventory
116 Supplies
118 Prepaid Insurance
120 Land
123 Building
124 Accumulated Depreciation-Building
125 Office Equipment
126 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
213 Interest Payable
214 Notes Payable
221 Wages Payable
222 Social Security Tax Payable
223 Medicare Tax Payable
224 Employees Federal Income Tax Payable
225 Employees State IncomeTax Payable
226 Federal Unemployment Tax Payable
227 State Unemployment Tax Payable
228 State Disability Insurance
231 Medical Insurance Payable
232 Retirement Savings Deductions Payable
233 Union Dues Payable
234 Vacation Pay Payable
241 Product Warranty Payable
EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
313 Income Summary
REVENUE
410 Sales
610 Interest Revenue
EXPENSES
510 Cost of Merchandise Sold
520 Wages Expense
525 Delivery Expense
526 Repairs Expense
531 Rent Expense
533 Insurance Expense
534 Supplies Expense
535 Cash Short and Over
536 Product Warranty Expense
541 Payroll Tax Expense
542 Vacation Pay Expense
543 Federal Income Tax Expense
544 State Income Tax Expense
551 Depreciation Expense-Building
552 Depreciation Expense-Office Equipment
590 Miscellaneous Expense
710 Interest Expense

Journalize the entry to record the payroll for the week of December 10. If required, round your answers to the nearest cent. Refer to the Chart of Accounts for exact wording of account titles.

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Journalize the entry to record the payroll tax expense incurred for the week of December 10. If required, round your answers to the nearest cent. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

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Homework Answers

Answer #1
DESCRIPTION POST. REF. DEBIT CREDIT
Wages Expense 180000
      Social Security Tax Payable 10800 =180000*6%
      Medicare Tax Payable 2700 =180000*1.5%
       Employees Federal Income Tax Payable 32000
       Wages Payable 134500
Payroll Tax Expense 14964
      Social Security Tax Payable 10800
      Medicare Tax Payable 2700
      Federal Unemployment Tax Payable 192 =24000*0.8%
      State Unemployment Tax Payable 1272 =24000*5.3%
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