The Tidle Manufacturing Company uses a job order cost system. Factory wages are paid on a straight hourly basis with indirect labor getting $8.50 an hour and direct labor getting $10.00 an hour. During the week of January 7, the following hours were worked: Direct Indirect Cutting Department 2,200 250 Splicing Department 2,400 200 Sanding Department 1,850 125 Joining Department 4,250 325 Salaries

Question

and wages are paid weekly, with administrative salaries totaling $16,500 and salesperson's salaries totaling $12,200. The following deductions are to be considered: FICA tax 8.0% Federal income tax 12.0% State income tax 2.0% Federal unemployment tax 1.0% State unemployment tax 5.0% Prepare journal entries to record:
a. The payroll.
b. The payment of the payroll.
c. The payroll distribution.
d. The employer's payroll tax expense.

Answer 1

(a) Payroll* 143,350.00 .
FICA Tax Payable ($143,350 x 8% ) 11,468.00
Federal Income Tax Withheld ($143,350 x 12%) 17,202.00
State Income Tax Payable ($143,350 x 2% ) 2,867.00
Salaries and Wages Payable 111,813.00
To record payroll.
*(10,700 x $10) + (900 . x $8.50) + $16,500 + $12,200 .
(b) Salaries and Wages Payable 111,813.00 .
Cash 111,813.00
To pay payroll.

(c) Work in Process (10,700 x $10 ) 107,000.00 .
Factory Overhead (900 x $8.50) 7,650.00 .
Administrative Salaries 16,500.00 .
Sales Salaries 12,200.00 .
Payroll 143,350.00
To distribute payroll.

(d) Factory Overhead* 16,051.00 .
Payroll Tax Expense--Administrative Salaries** 2,310.00 .
Payroll Tax Expense--Sales Salaries*** 1,708.00 .
FICA Tax Payable ($143,350 x 8%) 11,468.00
Federal Unemployment Tax Payable ($143,350 x 1%) 1,433.50
State Unemployment Tax Payable ($143,350 x 5%) 7,167.50
To record employer's share of payroll taxes.
*($107,00 . + $7,650) x (8% + 1% + 5%) = $16,051
**$16,500 x (8% + 1% + 5%) = $2,310
***$12,200 x (8% + 1% + 5%) = $1,708