Question

Payroll Accounts and Year-End Entries

The following accounts, with the balances indicated, appear in the ledger of Garcon Co. on December 1 of the current year:

211

Salaries Payable

—

212

Social Security Tax Payable

$15,276

213

Medicare Tax Payable

4,020

214

Employees Federal Income Tax Payable

24,790

215

Employees State Income Tax Payable

24,120

216

State Unemployment Tax Payable

2,546

217

Federal Unemployment Tax Payable

804

218

Bond Deductions Payable

6,000

219

Medical Insurance Payable

46,600

411

Operations Salaries Expense

1,623,000

511

Officers Salaries Expense

1,059,000

512

Office Salaries Expense

269,000

519

The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December:

Dec. 2	Issued Check No. 410 for $ 6,000 to Jay Bank to purchase U.S. savings bonds for employees.
Dec. 2	Issued Check No. 411 to Jay Bank for $ 44,086 in payment of $15,276 of social security tax, $4,020 of Medicare tax, and $24,790 of employees' federal income tax due.
Dec. 13	Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:

Salary distribution:
Operations	$75,000
Officers	47,000
Office	12,000	134,000
Deductions:
Social security tax	8,040
Medicare tax	2,010
Federal income tax withheld	24,790
State income tax withheld	6,030
Savings bond deductions	3,000
Medical insurance deductions	7,772	51,642
Net amount		82,358

Dec. 13	Issued Check No. 420 in payment of the net amount of the biweekly payroll.
Dec. 13	Journalized the entry to record payroll taxes on employees' earnings of December 13: social security tax, $8,040; Medicare tax, $2,010; state unemployment tax, $640; federal unemployment tax, $210.
Dec. 16	Issued Check No. 424 to Jay Bank for $ 44,890, in payment of $16,080 of social security tax, $4,020 of Medicare tax, and $24,790 of employees' federal income tax due.
Dec. 19	Issued Check No. 429 to Sims-Walker Insurance Company for $ 46,600, in payment of the semiannual premium on the group medical insurance policy.
Dec. 27	Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:

Salary distribution:
Operations	$73,000
Officers	47,000
Office	12,000	132,000
Deductions:
Social security tax	7,920
Medicare tax	1,980
Federal income tax withheld	24,156
State income tax withheld	5,940
Savings bond deductions	3,000	42,996
Net amount		89,004

Dec. 27	Issued Check No. 541 in payment of the net amount of the biweekly payroll.
Dec. 27.	Journalized the entry to record payroll taxes on employees' earnings of December 27: social security tax, $7,920; Medicare tax, $1,980; state unemployment tax, $320; federal unemployment tax, $105.
Dec. 27	Issued Check No. 543 for $ 36,090 to State Department of Revenue in payment of employees' state income tax due on December 31.
Dec. 31	Issued Check No. 545 to Jay Bank for $ 6,000 to purchase U.S. savings bonds for employees.
Dec. 31	Paid $70,000 to the employee pension plan. The annual pension cost is $91,000. (Record both the payment and unfunded pension liability.)

Required:

1. Journalize the transactions. If an amount box does not require an entry, leave it blank. For December 13th transactions, (a.) record the payroll and (b.) payment of salaries. For December 27th transactions, (a.) record the payroll, (b.) payment of salaries, (c.) record the taxes, and (d.) payment of taxes.

Date	Account	Debit	Credit
Dec. 2	Bond Deductions Payable
	Cash
Dec. 2	Social Security Tax Payable
	Medicare Tax Payable
	Employees Federal Income Tax Payable
	Cash
Dec. 13 (a.)	Operations Salaries Expense
	Officers Salaries Expense
	Office Salaries Expense
	Social Security Tax Payable
	Medicare Tax Payable
	Employees Federal Income Tax Payable
	Employees State Income Tax Payable
	Bond Deductions Payable
	Medical Insurance Payable
	Salaries Payable
Dec. 13 (b.)	Salaries Payable
	Cash
Dec. 13-Taxes	Payroll Tax Expense
	Social Security Tax Payable
	Medicare Tax Payable
	State Unemployment Tax Payable
	Federal Unemployment Tax Payable
Dec. 16-Taxes	Social Security Tax Payable
	Medicare Tax Payable
	Employees Federal Income Tax Payable
	Cash
Dec. 19-Ins.	Medical Insurance Payable
	Cash
Dec. 27 (a.)	Operations Salaries Expense
	Officers Salaries Expense
	Office Salaries Expense
	Social Security Tax Payable
	Medicare Tax Payable
	Employees Federal Income Tax Payable
	Employees State Income Tax Payable
	Bond Deductions Payable
	Salaries Payable
Dec. 27 (b.)	Salaries Payable
	Cash
Dec. 27 (c.)	Payroll Tax Expense
	Social Security Tax Payable
	Medicare Tax Payable
	State Unemployment Tax Payable
	Federal Unemployment Tax Payable
Dec. 27 (d.)	Employees State Income Tax Payable
	Cash
Dec. 31-Bonds	Bond Deductions Payable
	Cash
Dec. 31	Pension Expense
	Cash
	Unfunded Pension Liability

2a. Journalize the following adjusting entry on December 31. Salaries accrued: operations salaries, $7,300; officers salaries, $4,700; office salaries, $1,200 . The payroll taxes are immaterial and are not accrued. If an amount box does not require an entry, leave it blank.

Date	Account	Debit	Credit
Dec. 31	Operations Salaries Expense
	Officers Salaries Expense
	Office Salaries Expense
	Salaries Payable

2b. Journalize the following adjusting entry on December 31: Vacation pay, $24,500.

Date	Account	Debit	Credit
Dec. 31	Vacation Pay Expense
	Vacation Pay Payable

Payroll Tax Expense

230,480

Answer 1

Date	Account	Debit	Credit
Dec. 2	Bond Deductions Payable	6,000.00
	Cash		6,000.00
Dec. 2	Social Security Tax Payable	15,276.00
	Medicare Tax Payable	4,020.00
	Employees Federal Income Tax Payable	24,790.00
	Cash		44,086.00
Dec. 13 (a.)	Operations Salaries Expense	75,000.00
	Officers Salaries Expense	47,000.00
	Office Salaries Expense	12,000.00
	Social Security Tax Payable		8,040.00
	Medicare Tax Payable		2,010.00
	Employees Federal Income Tax Payable		24,790.00
	Employees State Income Tax Payable		6,030.00
	Bond Deductions Payable		3,000.00
	Medical Insurance Payable		7,772.00
	Salaries Payable		82,358.00
Dec. 13 (b.)	Salaries Payable	82,358.00
	Cash		82,358.00
Dec. 13-Taxes	Payroll Tax Expense	10,900.00
	Social Security Tax Payable		8,040.00
	Medicare Tax Payable		2,010.00
	State Unemployment Tax Payable		640.00
	Federal Unemployment Tax Payable		210.00
Dec. 16-Taxes	Social Security Tax Payable	16,080.00
	Medicare Tax Payable	4,020.00
	Employees Federal Income Tax Payable	24,790.00
	Cash		44,890.00
Dec. 19-Ins.	Medical Insurance Payable	46,600.00
	Cash		46,600.00
Dec. 27 (a.)	Operations Salaries Expense	73,000.00
	Officers Salaries Expense	47,000.00
	Office Salaries Expense	12,000.00
	Social Security Tax Payable		7,920.00
	Medicare Tax Payable		1,980.00
	Employees Federal Income Tax Payable		24,156.00
	Employees State Income Tax Payable		5,940.00
	Bond Deductions Payable		3,000.00
	Salaries Payable		89,004.00
Dec. 27 (b.)	Salaries Payable	89,004.00
	Cash		89,004.00
Dec. 27 (c.)	Payroll Tax Expense	10,325.00
	Social Security Tax Payable		7,920.00
	Medicare Tax Payable		1,980.00
	State Unemployment Tax Payable		320.00
	Federal Unemployment Tax Payable		105.00
Dec. 27 (d.)	Employees State Income Tax Payable	36,090.00
	Cash		36,090.00
Dec. 31-Bonds	Bond Deductions Payable	6,000.00
	Cash		6,000.00
Dec. 31	Pension Expense	91,000.00
	Cash		70,000.00
	Unfunded Pension Liability		21,000.00

2a
Adjusting Entry
Date	Account	Debit	Credit
Dec. 31	Operations Salaries Expense	7,300.00
	Officers Salaries Expense	4,700.00
	Office Salaries Expense	1,200.00
	Salaries Payable		13,200.00

2b
Date	Account	Debit	Credit
Dec. 31	Vacation Pay Expense	24,500.00
	Vacation Pay Payable		24,500.00

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