Question

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.

PAGE 1

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5

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.

PAGE 1

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5

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%