For the year ended december 31, 2017, denkinger electrical repair company reports the following summary payroll data.

gross earnings:
administrative salaries $188,500
electricians’ wages 342,000
total $530,500
deductions:
fica taxes $35,065
federal income taxes withheld 160,000
state income taxes withheld (3%) 15,915
united fund contributions payable 25,594
health insurance premiums 19,500
total $256,074

denkinger company’s payroll taxes are social security tax 6.2%, medicare tax 1.45%, state unemployment 2.5% (due to a stable employment record), and 0.8% federal unemployment. gross earnings subject to social security taxes of 6.2% total $441,500, and gross earnings subject to unemployment taxes total $136,500.

(a)

prepare a summary journal entry at december 31 for the full year’s payroll.
(b)

journalize the adjusting entry at december 31 to record the employer’s payroll taxes.

Answer&Explanation:

We debit the wages expense, credit all the deduction as payable and cash for the net pay.

Wages Expense 530,500 credit

    Cash                                             274,426 credit

    FICA tax payable                           35,065 credit

    Wages Federal income payable 160,000 credit

    Wages State Income payabe         15,915 credit

    Health insurance payable              19,500 credit

    United Fund payable                     25,594 credit

--payroll for the year--

We debit payroll tax expense and credit all type of taxes as payable:

Payroll tax expense 39569,75 debit

          OASDI      payable      27,373 credit (441,500)

          Medicare payable        7692,25 credit (530,500 x 1.45%)

          SUTA       payable        3,412.5 credit (136,500 x 2.5%)

          FUTA       payable        1,092   credit (136,500 x0.8%)

--employer payroll taxes--

We debit all payables taxes and credit cash for the total

Wages Federal income payable 160,000     debit

Wages State Income payabe         15,915     debit

Health insurance payable              19,500    debit

United Fund payable                     25,594    debit

FUTA       payable                             1,092     debit

SUTA       payable                             3,412.5  debit

Medicare payable                            7692,25 debit

OASDI      payable                         27,373      debit

           Cash                                                 295,644.75 credit

--payment of payroll and deduction--