For the year ended December 31, 2017, Denkinger Electrical Repair Company report
ID: 2588897 • Letter: F
Question
For the year ended December 31, 2017, Denkinger Electrical Repair Company reports the following summary payroll data.
Gross earnings:
Administrative salaries $186,500
Electricians’ wages 390,000
Total $576,500
Deductions:
FICA taxes $38,584
Federal income taxes withheld 166,500
State income taxes withheld (3%) 17,295
United Fund contributions payable 27,813
Health insurance premiums 18,000
Total $268,192
Denkinger Company’s payroll taxes are Social Security tax 6.2%, Medicare tax 1.45%, state unemployment 2.5% (due to a stable employment record), and 0.8% federal unemployment. Gross earnings subject to Social Security taxes of 6.2% total $487,500, and gross earnings subject to unemployment taxes total $124,000.
(a)
Prepare a summary journal entry at December 31 for the full year’s payroll.
(b)
Journalize the adjusting entry at December 31 to record the employer’s payroll taxes.
(Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No.
Account Titles and Explanation
Debit
Credit
(a)
(b)
(c) The W-2 Wage and Tax Statement requires the following dollar data.
Complete the required data for the following employees. (Round answers to 0 decimal places, e.g. 5,275.)
Employee
Wages, Tips, Other Compensation
Federal Income Tax Withheld
State Income Tax Withheld
FICA Wages
FICA Tax Withheld
Maria Sandoval
$60,000 $29,400
$
$
$
Jennifer Mingenback
27,500 10,725
Explanation / Answer
Solution:
(a) Administrative Salaries Expense............................... 186,500
Electricians’ Wages Expense.......................................... 390,000
FICA Taxes Payable................................................................ 38,584
Federal Income Taxes Payable............................................. 166,500
State Income Taxes Payable............................................ 17,295
United Fund Contributions Payable.................................. 27,813
Hospital Insurance Premiums Payable............................. 18,000
Wages Payable.................................................................$308,308
(b) Payroll Tax Expense....................................................... 34,317
Social Security Taxes Payable ($487,500 X 6.2%) .......................................... 30,225
Federal Unemployment Taxes Payable ($124,000 X .8%).............................. 992
State Unemployment Taxes Payable ($124,000 X 2.5%)................................ 3,100
(c) Employee Wages, Tips, Federal Income State Income FICA FICA
Other Compensation Tax Withheld Tax Withheld Wages Tax Withheld
Maria Sandoval $60,000 $29,400 1,800 (1) $60,000 3,720
Jennifer Mingenback $27,500 10,725 825 (2) $27,500 2,200
(1) $60,000 x 3%
(2) $27,500 x 3%