Reference no: EM13555776

Payroll accounts and year-end entries

The following accounts, with the balances indicated, appear in the ledger of Garcon Co. on December 1 of the current year:

211	Salaries Payable	-	218	Bond Deductions Payable	$ 3,400
212	Social Security Tax Payable	$ 9,273	219	Medical Insurance Payable	27,000
213	Medicare Tax Payable	2,318	411	Operations Salaries Expense	950,000
214	Employees Federal Income Tax Payable	15,455	511	Officers Salaries Expense	600,000
215	Employees State Income Tax Payable	13,909	512	Office Salaries Expense	150,000
216	State Unemployment Tax Payable	1,400	519	Payroll Tax Expense	137,951
217	Federal Unemployment Tax Payable	500

The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December:

Dec. 2. Issued Check No. 410 for $3,400 to Jay Bank to purchase U.S. savings bonds for employees.

2. Issued Check No. 411 to Jay Bank for $27,046 in payment of $9,273 of social security tax, $2,318 of Medicare tax, and $15,455 of employees' federal income tax due.

13. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:

Salary distribution:
Operations	$43,200
Officers	27,200
Office	6,800	$77,200
Deductions:
Social security tax	$ 4,632
Medicare tax	1,158
Federal income tax withheld	15,440
State income tax withheld	3,474
Savings bond deductions	1,700	30,904
Medical insurance deductions	4,500	$46,296
Net amount

27. Issued Check No. 541 in payment of the net amount of the biweekly payroll.

27. Journalized the entry to record payroll taxes on employees' earnings of December 27: social security tax, $4,668; Medicare tax, $1,167; state unemployment tax, $225; federal unemployment tax, $75.

27. Issued Check No. 543 for $20,884 to State Department of Revenue in payment of employees' state income tax due on December 31.

31. Issued Check No. 545 to Jay Bank for $3,400 to purchase U.S. savings bonds for employees.

31. Paid $45,000 to the employee pension plan. The annual pension cost is $60,000.

(Record both the payment and unfunded pension liability.)

Instructions

1. Journalize the transactions.

2. Journalize the following adjusting entries on December 31:

a. Salaries accrued: operations salaries, $8,560; officers salaries, $5,600; office salaries, $1,400. The payroll taxes are immaterial and are not accrued.

b. Vacation pay, $15,000.