The following monthly data are taken from Ramirez Company at July 31: Sales sala
ID: 2524995 • Letter: T
Question
The following monthly data are taken from Ramirez Company at July 31: Sales salaries, $640,000; Office salaries, $128,000; Federal income taxes withheld, $192,000; State income taxes withheld, $43,000; Social security taxes withheld, $47,616; Medicare taxes withheld, $11,136; Medical insurance premiums, $15,400; Life insurance premiums, $12,300; Union dues deducted, $8,400; and Salaries subject to unemployment taxes, $69,000. The employee pays 40% of medical and life insurance premiums.
Prepare journal entries to record (1) accrued payroll, including employee deductions for July; (2) cash payment of the net payroll (salaries payable) for July; (3) accrued employer payroll taxes, and other related employment expenses for July - assume that FICA taxes are identical to those on employees and that SUTA takes are 5.4% and FUTA taxes are 0.6% and (4) cash payment of all liabilities related to the July payroll.
Explanation / Answer
Transaction account titles and explanation debit credit 1 sales Salaries expense 640000 Office Salaries expense 128000 Social Security tax payable 47616 Medicare tax payable 11136 Employee federal income tax payable 192000 Employee state income tax payable 43000 Employee medical insurance premium payable (15400*40%) 6160 Employee life insurance premium payable (12300*40%) 4920 Employee union dues payable 8400 Salaries payable (balancing figure) 454768 2. Salaries payable 454768 Cash 454768 3. payroll tax expense 79512 Social Security tax payable 47616 Medicare tax payable 11136 State unemployment tax payable (69000*5.40%) 3726 Federal unemployment tax payable (69000*0.6%) 414 Employee medical insurance premium payable (15400*60%) 9240 Employee life insurance premium payable (12300*60%) 7380 4. social security tax payable (47616+47616) 95232 Medicare tax payable (11136+11136) 22272 Employee federal income tax payable 192000 Employee state income tax payable 43000 Employee medical insurance payable 15400 Employee life insurance payable 12300 Employee union dues payable 8400 State unemployment tax payable 3726 Federal unemployment tax payable 414 Cash 392744
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