PR 10-5B Payroll accounts and year-end entries
The following accounts, with the balances indicated, appear in the ledger of Codigo Co. on December 1 of the current year:
| 101 Salaries Payable | — | 108 Bond Deductions Payable | $ 2,300 |
| 102 Social Security Tax Payable | $2,913 | 109 Medical Insurance Payable | 2,520 |
| 103 Medicare Tax Payable | 728 | 201 Sales Salaries Expense | 700,000 |
| 104 Employees Federal Income Tax Payable | 4,490 | 301 Officers Salaries Expense | 340,000 |
| 105 Employees State Income Tax Payable | 4,078 | 401 Office Salaries Expense | 125,000 |
| 106 State Unemployment Tax Payable | 1,260 | 408 Payroll Tax Expense | 59,491 |
| 107 Federal Unemployment Tax Payable | 360 |
The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December:
Dec. 1. Issued Check No. 815 to Aberderas Insurance Company for $2,520, in payment of the semiannual premium on the group medical insurance policy.
1. Issued Check No. 816 to Alvarez Bank for $8,131, in payment for $2,913 of social security tax, $728 of Medicare tax, and $4,490 of employees’ federal income tax due.
2. Issued Check No. 817 for $2,300 to Alvarez Bank to purchase U.S. savings bonds for employees.
12. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:
| Salary distribution: | ||
| Sales | $14,500 | |
| Officers | 7,100 | |
| Office | 2,600 | $24,200 |
| Deductions: | ||
| Social security tax | $ 1,452 | |
| Medicare tax | 363 | |
| Federal income tax withheld | 4,308 | |
| State income tax withheld | 1,089 | |
| Savings bond deductions | 1,150 | |
| Medical insurance deductions | 420 | 8,782 |
| Net amount | $15,418 |
12. Issued Check No. 822 in payment of the net amount of the biweekly payroll.
12. Journalized the entry to record payroll taxes on employees’ earnings of December 12: social security tax, $1,452; Medicare tax, $363; state unemployment tax, $315; federal unemployment tax, $90.
15. Issued Check No. 830 to Alvarez Bank for $7,938, in payment of $2,904 of social security tax, $726 of Medicare tax, and $4,308 of employees’ federal income tax due.
26. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:
| Salary distribution: | ||
| Sales | $14,250 | |
| Officers | 7,250 | |
| Office | 2,750 | $24,250 |
| Deductions: | ||
| Social security tax | $ 1,455 | |
| Medicare tax | 364 | |
| Federal income tax withheld | 4,317 | |
| State income tax withheld | 1,091 | |
| Savings bond deductions | 1,150 | 8,377 |
| Net amount | $15,873 |
Dec. 26. Journalized the entry to record payroll taxes on employees’ earnings of December 26: social security tax, $1,455; Medicare tax, $364; state unemployment tax, $150; federal unemployment tax, $40.
30. Issued Check No. 851 for $6,258 to State Department of Revenue, in payment of employees’ state income tax due on December 31.
30. Issued Check No. 852 to Alvarez Bank for $2,300 to purchase U.S. savings bonds for employees.
31. Paid $55,400 to the employee pension plan. The annual pension cost is $65,500. (Record both the payment and the unfunded pension liability.)
Instructions
1. Journalize the transactions.
2. Journalize the following adjusting entries on December 31:
a. Salaries accrued: sales salaries, $4,275; officers salaries, $2,175; office salaries, $825.
The payroll taxes are immaterial and are not accrued.
b. Vacation pay, $13,350.
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