Summary of Payroll Procedures
Soprano Construction Company uses the job order cost system. In recording payroll transactions, the following accounts are used:
|
Cash |
Administrative Salaries |
|
Wages Payable |
Miscellaneous Administrative Expense |
|
FICA Tax Payable |
Sales Salaries |
|
Federal Unemployment Tax Payable |
Miscellaneous Selling Expense |
|
State Unemployment Tax Payable |
Factory Overhead |
|
Employees Income Tax Payable |
Work In Process |
Payroll
Factory employees are paid weekly, while all other employees are paid semimonthly on the 15th and the last day of each month. All salaries and wages are subject to all taxes. Following is a narrative of transactions completed during the month of January:
Jan.7 Recorded total earnings of factory employees, amounting to $68,200, less deductions for employees’ income taxes and FICA taxes.
7th Issued check for payment of the payroll
14th Recorded total earnings of factory employees amounting to $66,300, less deductions for employees’ income taxes and FICA taxes.
14th Issued check for payment of the payroll
15th Recorded administrative salaries, $9,000, and sales Salaries, $17,000, less deductions for employees’ income taxes and FICA taxes.
15th Issued check for payment of the salaries.
21st Recorded total earnings of factory employees amounting to $72,500, less deductions for the employees’ income taxes and FICA taxes.
21st Issued check for payment of payroll.
28th Recorded total earnings of factory employees amounting to $74,200, less deductions for employees’ income taxes and FICA taxes.
28th Issued check for payment of payroll
31st Recorded administrative salaries, $9,000, and sales salaries, $17,000, less deductions for employees’ income taxes and FICA taxes.
31st Issued check for payment of the salaries
31st The following wages and salaries were earned or accrued during January:.
|
Direct Labor |
302,500 |
|
Indirect Labor |
22,500 |
|
Administrative Salaries |
18,000 |
|
Sales Salaries |
34,000 |
|
Total |
377,000 |
Soprano Construction Company used the following form to compute the amount of payroll taxes incurred:
Items Taxable Earnings FICA Tax Federal Unemployment Tax State Unemployment
Tax Total Payroll Taxes
Factory wages
Administrative Wages
Sales salaries
Total
Required:
1. Complete the previous form to show the payroll taxes imposed on the employer for the month of January.
2. Prepare the journal entries to record the foregoing transactions, including the distribution of payroll costs and payroll taxes, assuming that the payroll taxes imposed on the employer for factory wages are to be charged to Factory Overhead, the taxes for Administrative salaries are to be charged to Miscellaneous Administrative expense, and the taxes for sales salaries are to be charged to Miscellaneous Selling Expense.
3. Assume that the factory employees worked on January 29, 30, and 31. What was the amount of accrued wages on January 31?