(Payroll Tax Entries) Allison Hardware Company's payroll for November 2012 is summarized below.
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Amount Subject to Payroll Taxes
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| |
|
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Unemployment Tax
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Payroll
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Wages Due
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FICA
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Federal
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State
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Factory
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$140,000
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$140,000
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$40,000
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$40,000
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|
Sales
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32,000
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32,000
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4,000
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4,000
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|
Administrative
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36,000
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36,000
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-
|
-
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Total
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$208,000
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$208,000
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$44,000
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$44,000
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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.