Question

Megerle Custom Cabinet Co. uses the job order cost system. In recording payroll transactions, the following accounts are used:
Cash ................ Administrative Salaries
Wages Payable ............ Miscellaneous Administrative Expense
FICA Tax Payable .......... Sales Salaries
Federal Unemployment Tax Payable ... Miscellaneous Selling Expense
State Unemployment Tax Payable .... Factory Overhead
Employees Income Tax Payable ...... Work in Process
Payroll
Factory employees are paid weekly, while all other employees are paid semimonthly on the fifteenth and the last day of each month. All salaries and wages are subject to all taxes. The income tax withheld amounts to 10% of gross wages.
Following is a narrative of transactions completed during January:
Jan.7 Recorded total earnings of factory employees amounting to $68,200, less deductions for employees’ income taxes and FICA taxes.
7 Issued check for payment of the payroll.
14 Recorded total earnings of factory employees amounting to $66,300, less deductions for employees’ income taxes and FICA taxes.
14 Issued check for payment of the payroll.
15 Recorded administrative salaries, $10,000, and sales salaries, $18,000, less deductions for employees’ income taxes and FICA taxes.
15 Issued check for payment of the salaries.
21 Recorded total earnings of factory employees amounting to $72,500, less deductions for employees’ income taxes and FICA taxes.
21 Issued check for payment of the payroll.
28 Recorded total earnings of factory employees amounting to $74,200, less deductions for employees’ income taxes and FICA taxes.
28 Issued check for payment of the payroll.
31 Recorded administrative salaries, $10,000, and sales salaries, $18,000, less deductions for employees’ income taxes and FICA taxes.
31 Issued check for payment of the salaries.
31 The following wages and salaries were earned or accrued during January:
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$302,500
Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,500
Administrative salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Sales salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,000
Megerle Custom Cabinet Co. used the following form to compute the amount of payroll taxes incurred:
Required:
1. Prepare the journal entries to record the foregoing transactions, including the distribution of payroll costs.
2. Complete the previous form to show the payroll taxes imposed on the employer for January.
3. Prepare the journal entry to distribute payroll taxes, assuming that the payroll taxes imposed on the employer for factory wages are to be charged to Factory Overhead, the taxes for administrative salaries are to be charged to Miscellaneous Administrative Expense, and the taxes for sales salaries are to be charged to Miscellaneous Selling Expense.
4. Assume that the factory employees worked on January 29, 30, and 31. What was the amount of accrued wages on January 31?


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  • CreatedMarch 31, 2015
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