ANALYSIS Identify Classify Business Transaction Section 1 Journalizing and

Analysis identify classify business transaction

This preview shows page 4 - 7 out of 34 pages.

ANALYSIS Identify Classify / Business Transaction Section 1 Journalizing and Posting the Payroll 341
Image of page 4
7. JOURNAL ENTRY 6. T ACCOUNTS Salaries Expense Credit Debit 1,350.25 Employees’ Federal Income Tax Payable Credit 100.00 Debit Employees’ State Income Tax Payable Credit 27.01 Debit Social Security Tax Payable Credit 83.73 Debit Medicare Tax Payable Credit 19.57 Debit Hospital Insurance Premiums Payable Credit 23.65 Debit U.S. Savings Bonds Payable Credit 25.00 Debit Cash in Bank Credit 1,071.29 Debit GENERAL JOURNAL PAGE 1 2 3 4 5 6 7 8 9 10 11 1 2 3 4 5 6 7 8 9 10 11 DEBIT CREDIT DESCRIPTION DATE POST. REF. 29 20-- June Salaries Expense Emplys’ Fed. Inc. Tax Pay. Emplys’ State Inc. Tax Pay. Social Sec. Tax Pay. Medicare Tax Pay. Hosp. Ins. Premiums Pay. U.S. Savings Bonds Pay. Cash in Bank Pay. Reg. 6/30—Ck 186 30 1 35025 10000 2701 83 73 1957 2365 2500 1 07129 4. Increases in expense accounts are recorded as debits. Debit Salaries Expense for $1,350.25. 5. Decreases in asset accounts are recorded as credits. Credit Cash in Bank for $1,071.29. Increases in liability accounts are recorded as credits. Credit Employees Federal Income Tax Payable for $100; Employees State Income Tax Payable for $27.01; Social Security Tax Payable for $83.73; Medicare Tax Payable for $19.57; Hospital Insurance Premiums Payable for $23.65; U.S. Savings Bonds Payable for $25.00. DEBIT-CREDIT RULE 342 Chapter 13 Payroll Liabilities and Tax Records
Image of page 5
The payroll expense is $1,350.25. The employees receive $1,071.29 in cash (net pay). Later the business will pay the federal government $203.30 ($100.00 federal income tax, $83.73 social security tax, and $19.57 Medicare tax). The business will also pay the state $27.01 for state income tax. A check for $23.65 will be written to the insurance company for hospital insurance premiums. Finally, a check for $25 will be sent to the federal government to purchase savings bonds. These liabilities are the result of deductions that were taken from employees earnings. In the next section, you will learn about the payroll tax liabilities of the employer. Posting the Payroll Entry How Do You Post the Payroll? Figure 13 1 shows the general journal entry and the individual ledger accounts after posting. Figure 13 1 Posting the Payroll Entry to the General Ledger GENERAL JOURNAL PAGE 1 2 3 4 5 6 7 8 9 10 11 1 2 3 4 5 6 7 8 9 10 11 DEBIT CREDIT DESCRIPTION DATE POST. REF. 29 20-- June 1 3 5 0 25 1 0 0 00 2 7 01 8 3 73 1 9 57 2 3 65 2 5 00 1 0 7 1 29 Salaries Expense Employees Fed. Inc. Tax Pay. Employees State Inc. Tax Pay. Social Security Tax Pay. Medicare Tax Pay. Hosp. Ins. Premiums Pay. U.S. Savings Bonds Pay. Cash in Bank Payroll Reg. 6/30 Ck. 186 30 514 210 215 220 225 230 235 101 DEBIT CREDIT BALANCE DEBIT CREDIT DESCRIPTION DATE POST. REF. ACCOUNT NO. ACCOUNT 20-- June 34 6 8 3 10 36 0 3 3 35 1 3 5 0 25 Balance 23 30 G29 Salaries Expense 514 DEBIT CREDIT BALANCE DEBIT CREDIT DESCRIPTION DATE POST.
Image of page 6
Image of page 7

You've reached the end of your free preview.

Want to read all 34 pages?

  • Spring '15
  • sabaham
  • Accounting, Taxes, Taxation in the United States, Federal Insurance Contributions Act tax

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes