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Chapter 7 of the text is a comprehensive Payroll Project that should be completed by students to demonstrate understanding of the material covered in Chapters 1-6. For each part of the payroll project you should complete the Journal, General Ledger, Payroll Register, and the Employee Earnings Record as applicable. When completing the Payrolls, complete the payroll register first, then transfer each employee’s amounts to the Employee Earnings Record, then complete the Journal entries applicable to the payroll, and then post to the general ledger.

• Part 1 (40 points) October 20 and October 23 transactions on pages 7-11 and 7-12, in the template this is color coded yellow. Use Journal page 43.

7-11 through 7-17

FICA Taxes Payable—OASDI and FICA Taxes Payable—HI were credited for $878.09 and
$205.37, respectively, the amounts deducted from employees’ wages.
Employees FIT Payable, Employees SIT Payable, Employees SUTA Payable, Employees CIT Payable, and Union Dues Payable were credited for the total amount withheld for each kind of deduction from employees’ wages. In subsequent payroll transactions, Group Insurance Premiums Collected will be credited for the amounts withheld from employees’ wages for this type of deduction. Finally, Payroll Cash was credited for the sum of the net amounts paid all employees.
Þ The payroll taxes for this pay were then recorded in the general journal (page 7-26) as follows:
Payroll Taxes .................................................................. 1,238.55
FICA Taxes Payable—OASDI.................................... 878.09
FICA Taxes Payable—HI ........................................... 205.36
FUTA Taxes Payable .................................................. 26.24
SUTA Taxes Payable—Employer................................ 128.86
Payroll Taxes was debited for the sum of the employer’s FICA, FUTA, and SUTA taxes. The taxable earnings used in computing each of these payroll taxes were obtained from the appropriate column totals of the payroll register. Note that only part of Ford’s wages are taxable ($700 out of $900 gross pay) for FUTA ($7,000 limit). The computation of the debit to Payroll Taxes was:
FICA—OASDI: 6.2% of $14,162.77 ¼ $ 878.09
FICA—HI: 1.45% of $14,162.77 ¼ 205.36
FUTA: 0.8% of $3,280.00 ¼ 26.24
SUTA: 3.703% of $3,480.00 ¼ 128.86
Total Payroll Taxes.................................................. $1,238.55
FICA Taxes Payable—OASDI was credited for $878.09, the amount of the liability for the
employer’s portion of the tax. FICA Taxes Payable—HI was credited for $205.36, the amount of the liability for the employer’s share of this tax. FUTA Taxes Payable was credited for the amount of the tax on the employer for federal unemployment purposes ($26.24). SUTA Taxes Payable—Employer was credited for the amount of the contribution required of the employer under the state unemployment compensation law. This same amount, $128.86, was charged as part of the debit to Payroll Taxes. þ The journal entries were posted to the proper ledger accounts (pages 7-35 to 7-42).

October 15
This is the day on which the deposits of FICA and FIT taxes and the city of
Philadelphia income taxes for the September payrolls are due. However, in order to
concentrate on the fourth-quarter payrolls, we will assume that the deposits for the
third quarter and the appropriate entries were already completed.

October 20
No. 2 On this date, Glo-Brite Paint Company must deposit the Pennsylvania state income
taxes withheld from the October 9 payroll. The deposit rule states that if the employer expects the aggregate amount withheld each quarter to be $1,000 or more, the employer must pay the withheld tax semimonthly.
The tax must be remitted within three banking days after the close of the semimonthly
periods ending on the 15th and the last day of the month. ffi Prepare the journal entry to record the deposit of the taxes, and post to the appropriate ledger accounts. ffl Pennsylvania has eliminated the filing of paper forms (replaced by telefile or online filing). The information needed to telefile is listed on page 7-52—complete the information worksheet needed for the first semimonthly period of October. The company’s Pennsylvania account number is 146-3-3300, its ID number is 31-0450660, its filing password is GBPCOM, and its telephone number is (215) 555-9559.

October 23
No. 3 Prepare the payroll for the last pay period of October from Time Clerk’s Report Nos.
40 and 41.
The proper procedure in recording the payroll follows: ffi Complete the payroll register.
Inasmuch as only a portion of the payroll register sheet was used in recording the
October 9 payroll, the October 23 payroll should be recorded on the same sheet to save
space. On the first blank ruled line after the October 9 payroll, insert
‘‘Payday October 23—For Period Ending October 17, 20—.’’ On the following lines, record the payroll information for the last pay date of October. When recording succeeding payrolls, continue to conserve space by recording two payrolls on each separate payroll register sheet.
The workers in the plant (Bonno and Ryan) are paid time and a half for any hours
worked over eight each workday and for work on Saturdays and are paid twice the
regular hourly rate for work on Sundays or holidays.
With this pay period, the cumulative earnings of several employees exceed the taxable
income base set up by FUTA and SUTA. This factor must be considered in preparing
the payroll register and in computing the employer’s payroll taxes. Refer to each
employee’s earnings record to see the amount of cumulative earnings.

7-12 Chapter 7 Payroll Accounting 2011

Time Clerk’s Report No. 40
For the Week Ending October 10, 20—

Employee Time Record Time Worked Time Lost
S M T W T F S
Bonno, A. V 8 8 8 8 8 4 44hrs ….
Ford, C. L 4 8 8 8 8 36hrs 4hrs*
Russell, V. A. 8 8 8 8 8 40hrs ….
Ryan, N. A. 8 8 8 8 8 40hrs ….
Student 8 8 8 8 4 36hrs ….
Williams, R. V 8 8 8 8 8 40hrs ….
*Time lost on account of death of relative; charged against annual personal leave; no deduction for time lost.


Time Clerk’s Report No. 41
For the Week Ending October 17, 20—

Employee Time Record Time Worked Time Lost
S M T W T F S
Bonno, A. V 8 8 8 8 8 4 44hrs ….
Ford, C. L 4 8 8 8 8 36hrs 4hrs*
Russell, V. A. 8 8 8 8 8 40hrs ….
Ryan, N. A. 8 8 8 8 8 40hrs ….
Student 8 8 8 8 4 36hrs ….
Williams, R. V 8 8 8 8 8 40hrs ….

ffl Make the entry transferring from Cash to Payroll Cash the net amount of the total
payroll, and post. Post the required information from the payroll register to each employee’s earnings record. Ð Record in the journal the salaries, wages, taxes withheld, group insurance premiums collected, union dues withheld, and net amount paid, and post to the proper ledger accounts. The entry required to record the October 23 payroll is the same as that to record the October 9 payroll, except it is necessary to record the liability for the amount withheld from the employees’ wages to pay their part of the group insurance premium. The amount withheld should be recorded as a credit to Group Insurance Premiums
Collected. ð Record in the journal the employer’s payroll taxes and the liabilities created; post to the appropriate ledger accounts.

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    Page 41

    JOURNAL
    DATE
    20--

    Oct.

    DESCRIPTION

    9 Payroll Cash
    Cash

    P OST.
    REF.

    DEBIT

    12
    11

    9 Administrative Salaries
    Office Salaries
    Sales Salaries
    Plant Wages
    FICA Taxes Payable - OASDI
    FICA...
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