Prepare a schedule showing the employer''s total cost

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Reference no: EM13971456

(Payroll Tax Entries) Allison Hardware Company's payroll for November 2012 is summarized below.

   

Amount Subject to Payroll Taxes

     

Unemployment Tax

Payroll

Wages Due

FICA

Federal

State

Factory

$140,000

$140,000

$40,000

$40,000

Sales

32,000

32,000

4,000

4,000

Administrative

36,000

36,000

-

-

Total

$208,000

$208,000

$44,000

$44,000

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.

Reference no: EM13971456

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