10.00 points Alamar Petroleum Company offers its employees the option of contrib

Question

10.00 points Alamar Petroleum Company offers its employees the option of contributing retirement funds up to 5% of their wages or salanes, with the connuson being matched by Alamar. Tho company also pays 80% o. medical and life insurance premiums. Deductions relating to these plans and other payroll information for the first biweekly payroll period of February are listed as follows: Wages and salaries Employee contribution to voluntary retrement plan Medical insurance premiums Life insurance premiums Federal income taxes to be withheld Local income taxes to be withheld Payrol taxes Federal unemployment tax rate State unemployment tax rate (after FUTA deduction Social Security tax rate Medicare tax rate $2,800,000 92,000 50,000 9,800 480,000 61,000 0.60% 540% 6.20% 1.45% Required: Preparo the appropriate jourmal 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 cumulasive wages do exceed the relevant unemployment wage bases. Salanies are not yet paid. (Of no entry is required for a transactionievent, select "No journal entry required" in the first account field.) view transaction list. C-view general journal 2,800,000 21 4 6

Explanation / Answer

Answer 2. Journal Entry Date Particulars Dr Amt. Cr. Amt Wages & Salaries                                                         Dr.    2800000     To Withholding Tax Payable (Local Tax) 61000     To Social Security Tax Payable (2800000 X 6.20%) 173600     To Medicare Taxes payable (2800000 X 1.45%) 40600     To Medical Insurance Payble (50000 X20%) 10000     To Life Insurance Payable (9800 X 20%) 1960     To Retirement Plan payable (Employee Cotribution) 92000     To Salaries & Wages payable 2420840 (Wages & Salaries due) Payroll Taxes Payable                                                  Dr. 332600     To Social Security Taxes Payable (Employer Contribution) 124000     To Medicare Taxes Payable (Employer Contribution) 40600     To FUTA Payable (2800000 X 0.60%) 16800     To State Unemployment Tax Payable (2800000 X 5.40%) 151200 (Payroll taxes due)      Salaries & Wages Expenses (Fringe Benefit)     Dr. 139840     To Medical Insurance Payble (50000 X80%) 40000     To Life Insurance Payable (9800 X 80%) 7840     To Retirement Plan payable (Employer Cotribution) 92000 (Employer share of differend Employess Plan) Answer 3. Journal Entry Date Particulars Dr Amt. Cr. Amt a. Interest                                                                                Dr. 26750    To Interest Payable - Bank Note 26750 (Interest due on Bank Note for 5 Months = 642000 X 10% X 5/12) b. Mortage Note Payable                                                 Dr.          1,360,000    To Cash 335000    To Motgage Note Payable - 10 Year    1,025,000 (Mortagage note - 10 years aare issued in exchange of old Morthgae Note and balnce amount is paid in cash) c Advance Recd - Subsidary Accounts                      Dr. 22750    to Accounts Receivables A/c 22750 (Amt. recd in advance from subsidaray accounts) d Rent - Income                                                              Dr. 31250     To Rent Recd in Advance 31250 (rent recd. In advance for 10 months - 37500 x 10/12)

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