Question

Record journal entry for ( C ) based on the following information:

- The final payroll entry (on 12/31/17) has wages of $55,000. There is $15,000 in federal withholding and $5,300 in state withholding. The social security tax rate is 12.4% and Medicare tax rate is 2.9% (These are total tax rates not just the employee or employer tax rates). FUTA has a 0.6% tax rate and SUTA has a 5.4% tax rate. There are no fringe benefits associated with this payroll. The wages are not paid in 2017, they will be paid January 2018. Round to nearest dollar.

-No pension expense related adjustments have been made. Service costs for the year is $16,000. The interest charged is $8,500. The expected return was $6,000. There was no prior service costs. The unamortized gain fell within the corridor so no entry is needed.

- In November you pre-paid $8,000 of December rent. Make an adjusting journal entry dated 12/31/17 recording rent expense as you have ‘used’ this pre-paid expense.

C) Grandview has a 40% tax rate. After recording the above entries, use pretax income to find Grandview’s tax expense and make an adjusting entry dated 12/31/17 to record the tax expense. Also notice that there is tax-exempt interest income listed in the chart of accounts. There are no temporary differences this year. Taxes will not be paid until March of 2018.

Answer 1

Journal entry for (C).

1. Journal entry for gross pay and withholding entry.

Date. Particulars. Debit. Credit. 12/31/17. Wages expenses. $ 55,000

To FICA payable $6,820

To Federal withholding payable. $15,000

To state withholding payable $ 5,300

To Medicare tax payable. $1,595

To Net payroll payable. $26,285

2. Journal entry for employer's payroll taxes and other expenses.

Date. Particulars. Debit. Credit. 12/31/17. Federal withholding expenses $80

State withholding expenses $286

To FUTA payable. $80

To SUTA payable. $286

3. Journal entry for payment of payroll liabilities.

Date. Particulars. Debit . Credit. 12/31/17 interest charges. $8500

Service cost $16000

To cash. $24500

4.Journal entry for tax expenses .

Date. Particulars. Debit. Credit.

12/31/17. Income tax expenses Dr. $8,400

To income tax payable. $2400

To deferred tax liability. $6000