Marcello Construction Co. uses the job order cost system. In recording payroll transactions, the following accounts are used:

Cash

Wages Payable

FICA Tax Payable

Federal Unemployment Tax Payable

State Unemployment Tax Payable

Employees Income Tax Payable

Payroll

Administrative Salaries

Miscellaneous Administrative Expense

Sales Salaries

Miscellaneous Selling Expense

Factory Overhead

Work in Process

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.

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

Marcello Construction Co. used the following form to compute the amount of payroll taxes incurred:

Required:
1. Complete the previous form to show the payroll taxes imposed on the employer for January.
2. Prepare the journal entries to record the foregoing transactions, including the distribution of payroll costs and 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.
3. Assume that the factory employees worked on January 29, 30, and 31. What was the amount of accrued wages on January31?

Transcribed Image Text:

Federal State Total Taxable Earnings FICA Tax Unemployment Unemployment Payroll Taxes Items Factory wages. Administrative salaries Sales salaries Total Tax Tax