The labor cost summary for the Martinez Manufacturing Company shows that wages and salaries earned (assume all earnings are fully taxable) by the employees for the period were as follows:
Regular time $190,000
Overtime 20,000 $210,000
Indirect labor 25,000
Administrative salaries 45,000
Sales salaries 40,000
Total wages and salaries $320,000
For this problem, assume the following tax rates:
FICAâ€”Employer and employee, each 8%
State unemployment taxâ€”4%
Federal income tax withholdingâ€”10% of earnings
For each of the transactions listed below, indicate the account(s) and amount(s) to be debited and credited. Designate the accounts by the identifying letters.
ACCOUNT TRANSACTION Acct. Amt. Acct. Amt. Scoring
A. Work in Process 1. Give the general journal
B. Accounts Payable entry to record payroll.
C. State Unemployment
Tax Payable 2. Give the general journal
D. Sales Salaries entry to record the
E. Payroll Taxes Expenseâ€” distribution of the labor
Sales Salaries cost summary data for
F. Payroll Taxes Expenseâ€” the period.
H. Employees Income Tax 3. Give the general journal
Payable entry to record payment
I. FUTA Tax Payable of the payroll
J. FICA Tax Payable
K. Factory Overhead 4. Give the general journal
L. Cash entry to record the
M. Administrative Salaries employerâ€™s tax liability
N. Wages Payable for the payroll.