Problem: Allison Hardware Company's payroll for November 2010 is summarized below.
|
|
|
|
Amount Subject to Payroll Taxes |
|
|
|
|
|
|
Unemployment Tax |
| Payroll |
|
Wages Due |
F.I.C.A |
|
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 emplyees have already received wages in excess of those to which payroll taxes apply. Assume that the state unemployment tax is 2.5%. The F.I.C.A. rate is 7.65% on an employee's wages to $102,000 and 1.45% in excess of $102,000. Of the $208,000 wages subject to F.I.C.A. tax, $20,000 of the sales wages is in excess of $102,000. 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.