Cullumber Company pays its office employee payroll weekly. Below is a partial li

Question

Cullumber Company pays its office employee payroll weekly. Below is a partial list of employees and their payroll data for August. Because August is their vacation period, vacation pay is also listed.

Employee

Earnings to
July 31

Weekly
Pay

Vacation Pay to Be
Received in August

Assume that the federal income tax withheld is 10% of wages. Union dues withheld are 2% of wages. Vacations are taken the second and third weeks of August by Robbins, Kirk, and Sprouse. The state unemployment tax rate is 2.5% and the federal is 0.8%, both on a $7,000 maximum. The FICA rate is 7.65% on employee and employer on a maximum of $118,500 per employee. In addition, a 1.45% rate is charged both employer and employee for an employee’s wages in excess of $118,500.

Make the journal entries necessary for each of the four August payrolls. The entries for the payroll and for the company’s liability are made separately. Also make the entry to record the monthly payment of accrued payroll liabilities. (Round answers to 2 decimal places, e.g. 15.25. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

(To record Payroll 1.)

(To record Payroll taxes for Payroll 1.)

(To record payrolls 2 and 3.)

(To record payroll taxes for Payrolls 2 and 3.)

(To record payroll 4.)

(To record payroll taxes for payroll 4.)

(To record the monthly payment of accrued payroll liabilities.)

Employee

Earnings to
July 31

Weekly
Pay

Vacation Pay to Be
Received in August

Mark Hamill $5,090 $200 - Karen Robbins 4,390 150 $300 Brent Kirk 3,590 110 220 Alec Guinness 8,290 250 - Ken Sprouse 8,890 330 660

Explanation / Answer

Accounts title and explanation debit credit Wages and Salaries Expense (200+150+110+250+330) 1040 Withholding Taxes Payable (10%*1040) 104 FICA Taxes Payable (7.65% *1040) 79.56 Union Dues Payable (2% * 1040) 20.80 Cash (balancing figure) 835.64 (to record payroll 1) Payroll tax expense 94.74 FICA Taxes Payable (7.65% * 1040) 79.56 Federal Unemployment Tax Payable (0.8%*(200+150+110)) 3.68 States unemployment tax payable (2.5%*(200+150+110)) 11.50 (to record payroll taxes for payroll 1) Vacation Wages payable (300+220+660)/2 590 Wages and Salaries expense (1040-590) 450 Withholding taxes payable (10%*1040) 104 FICA taxes payable (7.65%*1040) 79.56 Union dues payable (2%*1040) 20.80 Cash (balancing figure) 835.64 (to record payrolls 2 and 3) Payroll tax expense 94.74 FICA taxes payable 79.56 Federal unemployment tax payable (0.8%*(200+150+110)) 3.68 States unemployment tax payable (2.5%*(200+150+110)) 11.50 (to record payroll taxes for payrolls 2 and 3) Wages and Salaries expense 1040 Withholding taxes payable 104 FICA taxes payable 79.56 Union dues payable 20.80 Cash 835.64 (to record payroll 4) Payroll tax expense 94.74 FICA taxes payable 79.56 Federal unemployment tax payable 3.68 States unemployment tax payable 11.50 (to record payroll taxes for payroll 4) Withholding taxes payable (104*4) 416 FICA taxes payable (79.56*8) 636.48 Union dues payable (20.80*4) 83.20 Federal unemployment tax payable (3.68*4) 14.72 States unemployment tax payable (11.50*4) 46 Cash 1196.40 (to record the monthly payment of accrued payroll liabilities)

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