Fica and federal income taxes are recorded

Assignment Help Financial Accounting

Reference no: EM13915774

Introduction

The transactions in this practice set were completed by Hydro Paddle Boards, Inc. during January, the first month of the companys fiscal year. Hydro Paddle Boards, Inc. is a manufacturing corporation that designs and manufactures a limited variety of custom stand up paddle (SUP) boards. The SUP boards vary in size and performance, including beginner, intermediate, advanced, competition, and racing boards.

Hydro Paddle Boards maintains a job-order cost system.

You have accepted a position with Hydro Paddle Boards, Inc. as assistant controller, and you will begin your duties on January 1 of the current year. In your review of the previous assistant controller's records, you notice some jobs were incomplete as of December 31 of the previous year. These jobs are contained in the Job Cost Records. You plan to complete most of these jobs in January and to accept new jobs from dealers and other builders. You are responsible for the daily accounting operations, preparation of interim financial statements, and end-of-month adjusting and closing entries.

Hydro Paddle Boards, Inc. manufactures all products in a single production department. An individual job-order cost sheet is maintained for each job. The job-order cost sheet contains accumulated costs for each job, including actual direct materials, actual direct labor, and applied factory overhead.

Gross pay for direct labor is recorded by a debit to Work in Process. Salaries for all other factory personnel are recorded by a debit to Factory Overhead. Salaries of nonfactory personnel are recorded at the end of each month by a debit to the appropriate salary expense accounts. Deductions for employees' FICA and federal income taxes are recorded whenever gross pay is recorded, using the simplified rates of 7.5% (for FICA, including Medicare) and 15% (for federal income tax). All wages are paid on the last day of the month. All employer payroll taxes are recorded at the end of the month. Payroll taxes related to factory personnel are debited to Factory Overhead. Payroll taxes related to all other company personnel are debited to Payroll Taxes Expense--General.

Hydro Paddle Boards, Inc. maintains two materials accounts, one for Direct Materials and one for Indirect Materials and Factory Supplies.

Factory overhead is applied to each job based on 125% of direct labor cost for that job. Hydro Paddle Boards, Inc. maintains only one factory overhead account. Remember that debits to Factory Overhead represent actual overhead and credits to Factory Overhead represent applied overhead. Since the difference between actual factory overhead and applied factory overhead is insignificant, the over applied or under-applied balance is closed out to Cost of Goods Sold as an adjusting entry at the end of each month.

Hydro Paddle Boards, Inc. marks up all work by 40% of the job cost. Refer to the individual Job Cost Record for the total cost of the job and multiply the total cost by 140% to determine the selling price for each job.

Since Hydro Paddle Boards, Inc. sells to dealers, sales are exempt from state sales tax. All sales are on account and are subject to terms of 1/10, net 30 days, FOB shipping point.

Accounts Payable is used solely for the purchase of direct materials and indirect materials and factory supplies. All vendors expect full payment within 30 days. Operating expenses, with the exception of any accrued salaries, payroll taxes, property taxes, and income taxes, are paid when incurred.

All cash received is deposited in the bank, and all payments are made by check.

when dealing with an accounts receivable or accounts payable item, be sure to record teh company name in the General Journal and post to the Accounts Receivable or Accounts Payable Ledger.

Its is January 1, and you are ready to assume your new responsibilities.

1. Journalize the following entries for the month of January in the General Journal. When using the Work in Process account, be sure to post to the appropriate Job Cost Record.

January:

4.Paid Marine National Bank $45,733.48 for December payroll taxes payable as follows:

Employees' Income Tax Payable, $26,353.78; FICA Tax Payable $17,928.88; Federal Unemployment Tax , $812.44.

4.Paid $14,846.72 for Income Tax Payable.

4.Paid Coco PVC Company $21,428.00 in Payment of the December 31 balance.

4.Applied $7,248.00 of direct materials (1676) and $16,240.00 of direct labour (time ticket No. 258.) to Job No. 1403, which will complete the job. Use the simplified rates of 7.5% of gross pay fro employees FICA tax and 15% of gross pay for employees federal income tax. When preparing the entry for applying direct labour, debit Work in Process for the gross pay, and credit Employees Income Taxes Payable and FICA Tax Payable for the appropriate amounts and Salaries Payable for net pay .

Remember that employees are paid on the last day of each month.

Applied factory overhead to Job No. 1403 is based upon 125% of direct labor cost.

Jan. 4.Transferred the completed Job. 1403 to the appropriate customer. All sales are on account 1/10, net 30 days, FOB shipping point. Hydro Paddle Boards, Inc. marks up all work for by 40% of the job cost. Refer to the individual Job Order Cost Sheet for the total cost of the job and multiply the total cost by 140% to determine the selling price for each job.

Hydro Paddle Boards, Inc. maintains a perpetual inventory system. Each time a sale is made to a customer, you must debit Cost of Goods Sold and credit Finished Goods for the cost of the job

Reference no: EM13915774

Questions Cloud

Closing entries for the capital projects fund : You are a Hometown accountant. The Capital Project Fund has just been created to account for resources received and expended for the construction of a new Health Center.

Pierce company sold to stanton company : Pierce Company sold to Stanton Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Pierce prepaid the $500 shipping charge.

Not for profit organization receives : A not-for-profit organization receives a restricted gift. When and in which type of fund should it recognize the revenue? When and in which type of fund should it recognize the related expense

Create spontaneous making a good case for your core message : Create a spontaneous two- to five-minute speech making a good case for your core message. Even though you won't have much time to think about the details of your speech

Fica and federal income taxes are recorded : Gross pay for direct labor is recorded by a debit to Work in Process. Salaries for all other factory personnel are recorded by a debit to Factory Overhead. Salaries of nonfactory personnel are recorded at the end of each month by a debit to the appro..

Create ppt that ask an employee to share experiences : Create six visually appealing slides.* Base the slides on the following content, which will be spoken during the presentation titled Effective Employee Training. The comments shown here are only a portion of a longer presentation.

Describes the culture of romanesque architecture : 1) The term "pointed arches" best describes which style? 2) Which word best describes the culture that gave rise to Romanesque architecture?

Full amount due : A company purchased $3,300 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $365 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:

What is the par value per share of the preferred stock : The stockholders equity section of the balance sheet for Gator Company at December 31, 2013, is as follows:

User Account

All Pages