4277-6-6CPPB

AID: 1825 | 29/03/2013

Prepare the journal entries for the employer on January 12 to record payroll and payroll
taxes as follows:
(a) Journal entry for payroll is as follows:
Record the amount of gross payroll, all deductions, and net pay calculated in 5CPPB,
chapter-6 in payroll journal entry.
Gross payroll of all the employees
= $7,400.55
FICA-OASDI tax
= $458.87
FICA-HI tax
= $107.14
FIT tax
= $488.14
SIT tax
= $227.20
SUTA tax
= $5.92
CIT tax
= $74.01
SIMPLE Deduction
= $440.00
GROUP INS.
= $6.80
HEALTH INS.
= $16.50
Net pay
= $5,575.36

Journal
Date

1 Jan.

Description

12 Payment of Wages
FICA Taxes Payable
-OASDI
FICA Taxes Payable HI
Employees FIT
Payable
Employees SIT
payable
Employees SUTA tax
payable
Employees CIT
payable
SIMPLE Deduction
withheld
GROUP INS.
Withheld
HEALTH INS.
Withheld
Net salaries payable
(To record the payment
of wages and the
liability for the
employees' taxes
withheld.)

Post. Ref.

Record the journal entry in the book of employer on January 12 for the payment of
payroll for the week ending January 8 as follows:

Debit
($)

Credit
($)

4 0 0

55
4 5 8 87
1 0 7 34
4 8 8 14
2 2 7 20
5 92
7 4 01
4 4 0 00
6 80
1 6 50
5 5 7 5 36

Wages is an expense and increased by $7400.55. Therefore, debit wages with

$7,400.55.

FICA Taxes Payable - OASDI is a liability an increased by $458.87.Therefore,

credit FICA Taxes Payable - OASDI with $4583.87.

FICA Taxes Payable - HI is a liability and increased by $107.34. Therefore, credit

FICA Taxes Payable - HI with $107.34.

Employees FIT Payable is a liability and increased by $488.14. Therefore, credit

Employees FIT Payable with $488.14.

Employees SIT Payable is a liability and increased by $227.20. Therefore, credit

Employees SIT Payable with $227.20.

Employees SUTA Payable is a liability and increased by $5.92. Therefore, credit

Employees SUTA Payable with $5.92.

Employees CIT Payable is a liability and increased by $74.01. Therefore, credit

Employees CIT Payable with $74.01.

SIMPLE Deduction withheld is a liability and increased by $440.00. Therefore

credit SIMPLE deduction for $440.00.

GROUP INS. Withheld is a liability and increased by $6.80. Therefore, credit

GROUP INS. With $6.80.

HEALTH INS. is a liability and increased by $16.50. Therefore, credit HEALTH

INS. with $16.50.

Net salaries payable are liability and increased by $5,575.36. Therefore, credit net
salaries payable with $5,575.36.

(b) Compute the amount of payroll taxes as follows:

Compute the amount of FICA-OASDI taxes as follows:
Total gross wages
FICA-OASDI tax rate

= $7,400.55
= 6.2% on first $110,100.

FICA-OASDI tax Taxable salary Tax rate

$7, 400.55 6.2%
$458.83

(1)

Compute FICA tax (HI) as follows:

Taxable wages for HI
OASDI rate

= $7,400.55
= 1.45%

HI Tax Taxable wages HI rate

$7, 400.55

1.45
100

$107.31

(2)

Compute the amount of employee contribution to state unemployment

contribution (SUTA) as follows:
Taxable wages for SUTA
Contribution rate

= $7,400.55
= 3.703%

Employees SUTA Tax Taxable wages SUTA rate

$7, 400.55

3.703
100

$274.04

(3)

Compute the amount of employee contribution to Federal Unemployment

Contribution (FUTA) as follows:
Taxable wages for SUTA
Contribution rate

= $7,400.55
= 0.8%

Employees SUTA Tax Taxable wages SUTA rate

$7, 400.55

0.8
100

$59.20

(4)

So, the total Payroll taxes FICA-OASDI FICA-HI

SUTA FUTA
$458.83 $107.31 $274.04 $59.20
$899.38

(5)

Journal
Date

Description

1 Jan. 12 Payroll Taxes

FICA Taxes Payable
-OASDII
FICA Taxes Payable
-HI
SUTA taxes payable
FUTA taxes payable
(To record the payroll
taxes and liabilities of
the employer)

Post. Ref.

Record the journal entry in the book of employer on January 12 for payroll taxes as
follows:

Debit
($)

Credit
($)

8 9 9 38

5
4 5 8 83

1 0 7 31

2 7 4 04
5 9 20

3
4

Payroll taxes are expenses and increased by $899.38. Therefore, debit Payroll
taxes with $899.38.

FICA Taxes Payable - OASDI is a liability and increased by $458.83. Therefore,

credit FICA Taxes Payable - OASDI with $458.83.

FICA Taxes Payable - HI is a liability an increased by $107.31. Therefore, credit

FICA Taxes Payable - HI with $107.31.

SUTA taxes payable are liabilities and increased by $274.04. Therefore, credit
SUTA taxes payable with $274.04.

FUTA taxes payable are liabilities and increased by $59.20. Therefore, credit
FUTA taxes payable with $59.20.

(c) Make the journal entry to record the payment of the payroll on January 14 as
follows:

Journal
Date

Description

1 Jan. 14 Salaries Payable

Bank

Post. Ref.

Salaries payable (Total Net pay calculated in 5CPPB in Chapter - 6) = $5,575.36

Debit
($)

Credit
($)

5 5 7 5 36
5 5 7 5 36

(To record the

payment of net salary
payable)

Salaries payable is expenses and increased by $5,575.36. Therefore, debit Salaries

payable with $5,575.36.
Bank is an asset and decreased by $5,575.36. Therefore, credit bank with
$5,575.36.