Alamar Petroleum Company offers its employees the option of contributing retirem

Question

Alamar Petroleum Company offers its employees the option of contributing retirement funds up to 5% of their wa contribution being matched by Alamar. The company also pays 80% of medical and life insurance premiums. Deductions to these plans and other payroll information for the first biweekly payroll period of February are listed as follows: ges or salaries, with relating Wages and salaries Employee contribution to voluntary retiroment plan Hedical insurance premiums Life insurance premiums Federal income taxes to be withheld Local income taxes to be withheld Payroll taxes: Federal unemployment tax rate State unemployment tax rate (after TUTA deduction Social security tax rate Medicare tax rate $3,600,000 100, 000 8,000 10,600 560,000 69,000 0.608 5 . 40% 6.20% 1.45 Required Prepare the appropriate journal entries to record salaries and wages expense and payroll tax expense for the biweekly pay period Assume that no employee's cumulative wages exceed the relevant wage bases for Social Security, and that all employees cumulative wages do exceed the relevant unemployment wage bases. Salaries are not yet paid. (If no entry is required for a transaction/event select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet

Explanation / Answer

Event

General Journal

Debit

Credit

1.

Salaries & Wages Expense

3600000

Withholding Taxes Payable (Federal Income Tax)

560000

Withholding Taxes Payable (Loca Income Tax)

69000

Social Security Taxes Payable   (3600000 * 6.2%)

223200

Medicare Taxes Payable            (3600000 * 1.45%)

52200

Medical Insurance Payable

11600

Life Insurance Payable

2120

Retirement Plan Payable

100000

Salaries & Wages Payable

2581880

2.

Payroll Tax Expenses

275400

Social Security Taxes Payable

223200

Medicare Taxes Payable

52200

3.

Salaries & Wages Expense

154880

Medical Insurance Payable (58000 – 11600)

46400

Life Insurance Payable (10600 – 2120)

8480

Retirement Plan Payable

100000

Event

General Journal

Debit

Credit

1.

Salaries & Wages Expense

3600000

Withholding Taxes Payable (Federal Income Tax)

560000

Withholding Taxes Payable (Loca Income Tax)

69000

Social Security Taxes Payable   (3600000 * 6.2%)

223200

Medicare Taxes Payable            (3600000 * 1.45%)

52200

Medical Insurance Payable

11600

Life Insurance Payable

2120

Retirement Plan Payable

100000

Salaries & Wages Payable

2581880

2.

Payroll Tax Expenses

275400

Social Security Taxes Payable

223200

Medicare Taxes Payable

52200

3.

Salaries & Wages Expense

154880

Medical Insurance Payable (58000 – 11600)

46400

Life Insurance Payable (10600 – 2120)

8480

Retirement Plan Payable

100000

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