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P3-4 P3-10 P3-11

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P3-4 Computing and Journalizing Employer’s Payroll Taxes
The following form is used by Mountain Manufacturing Co. to compute payroll taxes incurred during April:
Unemployment Taxes
Classification of Wages and Salaries Earnings for Month FICA Tax 8% Federal Tax 1% State Tax 4% Total Payroll Taxes Imposed on Employer

Direct Labor 88,180
Indirect Labor 16,220
Payroll Taxes on factory wages ?
Administrative Salaries 12,000
Sales Salaries 11,500
Total Payroll Taxes ?

Required:
1. Using the above form, calculate the employer's payroll taxes for April. Assume that none of the employees has achieved the maximums for FICA and unemployment taxes.
2. Assuming that the employer payroll taxes on factory wages are treated as factory overhead, the taxes covering administrative salaries are an administrative expense, and the taxes covering sales salaries are a selling expense, prepare a general journal entry to record the employer's liability for the April payroll taxes.

P3-10 Summary of Payroll Procedures
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:

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?

P3-11 Accounting for bonus, vacation pay, and holiday pay
The factory payroll for the week is $200,000, consisting of $140,000 earned by 100 direct laborers and $60,000 earned by 30 indirect laborers. The total of factor bonuses to be received at year end is $400,000. All factory workers received a two-week paid vacation and five paid holidays.

Required: Prepare entries to distribute the weekly payroll and the costs and liabilities related to the bonus, vacation, and holiday pay, assuming that the fringe benefits of the direct laborers are charged to factory overhead.

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