(Payroll Tax Entries) Allison Hardware Company's payroll for November 2012 is summarized below.
|
Amount Subject to Payroll Taxes
|
| |
|
|
Unemployment Tax
|
|
Payroll
|
Wages Due
|
FICA
|
Federal
|
State
|
|
Factory
|
$140,000
|
$140,000
|
$40,000
|
$40,000
|
|
Sales
|
32,000
|
32,000
|
4,000
|
4,000
|
|
Administrative
|
36,000
|
36,000
|
-
|
-
|
|
Total
|
$208,000
|
$208,000
|
$44,000
|
$44,000
|
At this point in the year, some employees have already received wages in excess of those to which payroll taxes apply. Assume that the state unemployment tax is 2.5%. The FICA rate is 7.65% on an employee's wages to $106,800 and 1.45% in excess of $106,800. Of the $208,000 wages subject to FICA tax, $20,000 of the sales wages is in excess of $106,800. Federal unemployment tax rate is 0.8% after credits. Income tax withheld amounts to $16,000 for factory, $7,000 for sales, and $6,000 for administrative.
Instructions
(a) Prepare a schedule showing the employer's total cost of wages for November by function.
(b) Prepare the journal entries to record the factory, sales, and administrative payrolls including the employer's payroll taxes.