Professor Authored Problem Solutions
Intermediate Accounting 2
Accounting for Payroll
Solution to Problem 8
Wages and payroll tax expense.
Keegan’s wages through September changed to 110,000 in class.
1.
2.
What journal entry should Otte accrue for employer wages expense for the month of October?
What journal entry should Otte accrue for employer payroll tax expense for the month of
October?
Wages expense
Federal income taxes payable
State income taxes payable
Social security payable
Medicare payable
Wages payable
Payroll tax expense
Social security payable
Medicare payable
SUT payable
FUT payable
Federal income taxes
State income taxes
Employee SS tax
Employee Medicare tax
Employer SS tax
Employee Medicare tax
SUT tax
FUT tax
13,000
2,800
550
620
189
8,841
957
620
189
140
8
given
given
0.062*(3,000+7,000)
0.0145*(3,000+10,000)
0.062*(3,000+7,000)
0.0145*(3,000+10,000)
0.07*2,000
0.008*1,000
© 2014 by W. David Albrecht. .
286
Solution to Problem 9
Wages and payroll tax expense.
1.
2.
3.
What journal entry should Albrecht make to accrue for employer wages expense for the month
of February?
What journal entry should Albrecht make accrue for employer payroll tax expense for the month
of February?
What journal entry should Albrecht make for the payment of all payroll taxes?
Wages expense
Federal income tax payable
State income tax payable
Social security payable
Medicare payable
Wages payable
11,600
1,890
490
719.2
168.2
8,332.6
Payroll tax expense
1,300.2
Social security payable
Medicare payable
Federal unemployment payable
State unemployment payable
Wages payable
Cash
Federal income tax payable
State income tax payable
Social security payable
Medicare payable
Federal unemployment payable
State unemployment payable
Cash
Federal income taxes
State income taxes
Employee SS tax
Employee Medicare tax
Employer SS tax
Employee Medicare tax
SUT tax
FUT tax
719.2
168.2
20.8
392
8,332.6
8,332.6
1,890
490
1,438.4
336.4
20.8
392
4,567.2
given
given
719.2 = 0.062*(2,600+9,000)
168.2 = 0.0145*(2,600+9,000)
719.2 = 0.062*(2,600+9,000)
168.2 = 0.0145*(2,600+9,000)
392 = 0.07*(2,600+3,000)
20.8 = 0.008*(2,600+0)
© 2014 by W. David Albrecht. .
287
Solution to Problem 10
Wages and payroll tax expense.
1.
2.
3.
What journal entry should Albrecht make to accrue for employer wages expense for the month
of June?
What journal entry should Albrecht make accrue for employer payroll tax expense for the month
of June?
What journal entry should Albrecht make for the payment of all payroll taxes?
Wages expense
Federal income tax payable
State income tax payable
Social security payable
Medicare payable
Wages payable
14,000
1,580
585
868
203
10,764
Payroll tax expense
1,311
Social security payable
Medicare payable
Federal unemployment payable
State unemployment payable
Wages payable
Cash
Federal income tax payable
State income tax payable
Social security payable
Medicare payable
Federal unemployment payable
State unemployment payable
Cash
Federal income taxes
State income taxes
Employee SS tax
Employee Medicare tax
Employer SS tax
Employee Medicare tax
SUT tax
FUT tax
868
203
0
240
10,764
10,764
1,580
585
1,736
406
0
240
4,547
given
given
868 = 0.062*(3,000+11,000)
203 = 0.0145*(3,000+11,000)
868 = 0.062*(3,000+11,000)
203 = 0.0145*(3,000+11,000)
240 = 0.08*(3,000+0)
0 = 0.008*(0+0)
© 2014 by W. David Albrecht. .
288
Solution to Problem 11
Vacation and illness pay
This problem is a extension of problem 13. In class, we did numbers for problem 11. Here are the
numbers for problem 13
1.
2.
What journal entry should Albrecht make to accrue for vacation and illness pay for the month of
June?
What journal entry should Albrecht make to account for the illness and vacation pay used by
Smith and Jones?
Compensation expense
Obligation for vacation pay
Obligation for illness pay
1,750
Obligation for illness pay
Obligation for vacation pay
Wages expense
80
5,500
© 2014 by W. David Albrecht. .
1,167
583
5,580
289
Solution to Problem 12
Payroll tax expense
Useful information for this problem:
Gross wages
$31,260
Income taxable wages
$27,950 (31,260 ! 2,400 ! 1,910)
Social security wages
$31,260
Medicare wages
$31,260
SUT wages
$12,000
FUT wages
$7,000
Wages expense
Federal income tax payable
State income tax payable
Pension payable
Healthcare payable
Social security payable
Medicare payable
Wages payable
31,260
Payroll tax expense
Social security payable
Medicare payable
SUT payable
FUT payable
3,810
930
2,400
930
1,938
453
18,407
3,095
1,938
453
648
56
Solution to Problem 13
Payroll tax expense
Payroll tax expense
Social security payable
Medicare payable
SUT payable
FUT payable
2,807
1,938
453
360
56
Solution to Problem 14
Payroll tax expense
Payroll tax expense
Social security payable
Medicare payable
SUT payable
FUT payable
© 2014 by W. David Albrecht. .
3,527
1,938
453
1,080
56
290
Solution to Problem 15
Payroll, comprehensive.
This solution is based on the 2011 social security tax rate of 0.042 on employees. In 2013, the tax rate
increased to 0.062.
Part 2. The journal entries for February are based on accruals for work performed during January
Feb 3
Feb 3
Feb 6
Feb 10
Feb 15
Wages expense
Federal income tax payable
State income tax payable
Social security payable
Medicare payable
Pension plan payable
Wages payable
11,000
1,485
495
462
160
1,100
7,298
Payroll tax expense
1,276
Social security payable
Medicare payable
Federal unemployment payable
State unemployment payable
Wages payable
Cash
7,078
Federal income tax payable
State income tax payable
Social security payable
Medicare payable
Federal unemployment payable
State unemployment payable
Cash
1,485
495
1,155
320
56
378
Pension plan payable
Cash
1,100
682
160
56
378
7,078
3,889
1,100
© 2014 by W. David Albrecht. .
291
Dec 3
Dec 3
Dec 6
Dec 10
Dec 15
Wages expense
Federal income tax payable
State income tax payable
Social security payable
Medicare payable
Pension plan payable
Wages payable
11,000
Payroll tax expense
Social security payable
Medicare payable
Federal unemployment payable
State unemployment payable
1,485
495
0
160
1,100
7,760
160
0
160
0
0
Wages payable
Cash
7,760
Federal income tax payable
State income tax payable
Social security payable
Medicare payable
Federal unemployment payable
State unemployment payable
Cash
1,485
495
0
320
0
0
Pension plan payable
Cash
1,100
7,760
2,290
1,100
© 2014 by W. David Albrecht. .
292
0
106,800 SS ceiling
7,000 SUT ceiling
7,000 FUT ceiling
15.00%
5.00%
4.20%
6.20%
Federal tax
State tax
SS tax - employee
SS tax - employer
1.45% Medicare tax
5.40% SUT
0.80% FUT
10.00% Pension withholding
Part 1
Month
Monthly
Gross
Monthly
Inc tax
Monthly
Soc Sec
Monthly
Medicare
Monthly
SUTA
Monthly
FUTA
Accum
Gross
Accum
Inc tax
Accum
Soc Sec
Accum
Medicare
Accum
SUTA
Accum
FUTA
Wages
Wages
Wages
Wages
Wages
Wages
Wages
Wages
Wages
Wages
Wages
Wages
January
February
11,000
11,000
9,900
9,900
11,000
11,000
11,000
11,000
7,000
0
7,000
0
11,000
22,000
9,900
19,800
11,000
22,000
11,000
22,000
7,000
7,000
7,000
7,000
March
April
11,000
11,000
9,900
9,900
11,000
11,000
11,000
11,000
0
0
0
0
33,000
44,000
29,700
39,600
33,000
44,000
33,000
44,000
7,000
7,000
7,000
7,000
May
June
11,000
11,000
9,900
9,900
11,000
11,000
11,000
11,000
0
0
0
0
55,000
66,000
49,500
59,400
55,000
66,000
55,000
66,000
7,000
7,000
7,000
7,000
July
August
11,000
11,000
9,900
9,900
11,000
11,000
11,000
11,000
0
0
0
0
77,000
88,000
69,300
79,200
77,000
88,000
77,000
88,000
7,000
7,000
7,000
7,000
September
October
11,000
11,000
9,900
9,900
11,000
7,800
11,000
11,000
0
0
0
0
99,000
110,000
89,100
99,000
99,000
106,800
99,000
110,000
7,000
7,000
7,000
7,000
November
December
11,000
11,000
9,900
9,900
0
0
11,000
11,000
0
0
0
0
121,000
132,000
108,900
118,800
106,800
106,800
121,000
132,000
7,000
7,000
7,000
7,000
Total
132,000
118,800
106,800
132,000
7,000
7,000
© 2014 by W. David Albrecht. .
293
Month
January
February
March
April
May
June
July
August
September
October
November
December
Total
Pension
Fed
Payment Inc tax
State
Inc tax
Employee Employer
Soc Sec Soc Sec Medicare SUTA FUTA
Tax
Tax
Tax
Tax
Tax
Wages
Total
Net
Expense Deductions Payment
Payroll
Tax
Total
Expense Payments
1,100
1,100
1,100
1,100
1,100
1,100
1,100
1,100
1,100
1,100
1,100
1,100
1,485
1,485
1,485
1,485
1,485
1,485
1,485
1,485
1,485
1,485
1,485
1,485
495
495
495
495
495
495
495
495
495
495
495
495
462
462
462
462
462
462
462
462
462
328
0
0
682
682
682
682
682
682
682
682
682
484
0
0
160
160
160
160
160
160
160
160
160
160
160
160
378
0
0
0
0
0
0
0
0
0
0
0
56
0
0
0
0
0
0
0
0
0
0
0
11,000
11,000
11,000
11,000
11,000
11,000
11,000
11,000
11,000
11,000
11,000
11,000
3,702
3,702
3,702
3,702
3,702
3,702
3,702
3,702
3,702
3,568
3,240
3,240
7,298
7,298
7,298
7,298
7,298
7,298
7,298
7,298
7,298
7,432
7,760
7,760
1,276
842
842
842
842
842
842
842
842
644
160
160
1,276
842
842
842
842
842
842
842
842
644
160
160
13,200
17,820
5,940
4,486
6,622
1,920
378
56
132,000
43,366
88,634
8,976
8,976
© 2014 by W. David Albrecht. .
294