(Payroll Tax Entries) Allison Hardware Company’s payroll for November 2012 is summarized below.
|
Amount Subject to Payroll Taxes |
||||
|
Unemployment Tax |
||||
|
Payroll |
Wages Due |
FICA |
Federal |
State |
|
Factory |
$140,000 |
$140,000 |
$40,000 |
$40,000 |
|
Sales |
32,000 |
32,000 |
4,000 |
4,000 |
|
Administrative |
36,000 |
36,000 |
— |
— |
|
Total |
$208,000 |
$208,000 |
$44,000 |
$44,000 |
At this point in the year, some employees have already received wages in excess of those to which payroll taxes apply. Assume that the state unemployment tax is 2.5%. The FICA rate is 7.65% on an employee’s wages to $106,800 and 1.45% in excess of $106,800. Of the $208,000 wages subject to FICA tax, $20,000 of the sales wages is in excess of $106,800. Federal unemployment tax rate is 0.8% after credits. Income tax withheld amounts to $16,000 for factory, $7,000 for sales, and $6,000 for administrative.
Instructions
(a) Prepare a schedule showing the employer’s total cost of wages for November by function.
(b) Prepare the journal entries to record the factory, sales, and administrative payrolls including the employer’s payroll taxes.