Need A Tutor?    |   Need Homework Help?                                                                             Help and Support     | Join or Cancel

Exercise 11.1 Depositing payroll taxes. LO 11-1
The amounts of employee income tax withheld and social security and Medicare taxes (both employee and employer shares)
shown below were owed by different businesses on the specified dates. In each case, decide whether the firm is required to deposit
the sum in an authorized financial institution. If a deposit is necessary, give the date by which it should be made.
The employers are monthly depositors. 
 

   
Exercise 11.2 Recording deposit of social security, Medicare, and income taxes. LO 11-3
After Beam Corporation paid its employees on July 15, 2019, and recorded the corporation’s share of payroll taxes for the
payroll paid that date, the firm’s general ledger showed a balance of $20,700 in the Social Security Tax Payable account, a
balance of $4,246 in the Medicare Tax Payable account, and a balance of $19,260 in the Employee Income Tax Payable account.
On July 16, the business issued a check to deposit the taxes owed in the First Texas Bank.
Record this transaction in general journal form.
 

   
Exercise 11.3 Computing employer's payroll taxes. LO 11-2, 11-6
At the end of the weekly payroll period on June 30, 2019, the payroll registers of Concord Consultants showed employee earnings of $39,300.
Determine the firm’s payroll taxes for the period. Use a social security rate of 6.2 percent, Medicare rate of 1.45 percent, FUTA rate of 0.6 percent,
and SUTA rate of 5.4 percent. Consider all earnings subject to social security tax and Medicare tax and $22,646 subject to FUTA and SUTA taxes.
(Round "Rate" answers to 2 decimal places.)
 

   
Exercise 11.4 Depositing federal unemployment tax. LO 11-6
On March 31, 2019, the Federal Unemployment Tax Payable account in the general ledger of The Argosy Company showed a balance of $1,504.
This represents the FUTA tax owed for the first quarter of the year.
On April 30, 2019, the firm issued a check to deposit the amount owed in the First Security National Bank. Record this transaction in general journal form.
 

   
Exercise 11.5 Computing SUTA tax. LO 11-6
On April 30, 2019, Chung Furniture Company prepared its state unemployment tax return for the first quarter of the year.
The firm had taxable wages of$100,400. Because of a favorable experience rating, Chung pays SUTA tax at a rate of 1.4 percent.
How much SUTA tax did the firm owe for the quarter?
(Round "SUTA tax rate" answer to 3 decimal places. i.e., 12.3% should be entered as 0.123)
 

   
Exercise 11.6 Paying SUTA tax. LO 11-6
On June 30, 2019, the State Unemployment Tax Payable account in the general ledger of Alan Office Supplies showed a balance of $2,088.
This represents the SUTA tax owed for the second quarter of the year. On July 31, 2019,
the business issued a check to the state unemployment insurance fund for the amount due.
Record this payment in general journal form.
 
Exercise 11.7 Computing FUTA tax. LO 11-6
On January 31, AC Baking Company prepared its Employer’s Annual Federal Unemployment Tax Return, Form 940.
During the previous year, the business paid total wages of $419,016 to its 14 employees.
Of this amount, $136,000 was subject to FUTA tax.
Using a rate of 0.6 percent, determine the FUTA tax owed and the balance due on January 31, 2019,
when Form 940 was filed. A deposit of $700 was made during the year.

   
 
Exercise 11.8 Computing workers' compensation insurance premiums. LO 11-8
Kazana Medical Supplies estimates that its office employees will earn $206,000 next year and its factory
employees will earn $961,000. The firm pays the following rates for workers’ compensation insurance:
$0.60 per $100 of wages for the office employees and $8.40 per $100 of wages for the factory employees.
Determine the estimated premium for each group of employees and the total estimated premium for next year.
(Round "Rate" answers to 3 decimal places. i.e., 12.3% should be entered as 0.123)
 
Problem 11.1A Computing and recording employer's payroll tax expense. LO 11-2, 11-6
The payroll register of Big House Cleaning Company showed total employee earnings of $2,600 for the payroll period ended July 14, 2019.

Required:
Compute the employer’s payroll taxes for the period. Use rates of 6.2 percent for the employer’s share of the social security tax,
1.45 percent for Medicare tax, 0.6 percent for FUTA tax, and 5.4 percent for SUTA tax. All earnings are taxable.
 
Prepare a general journal entry to record the employer’s payroll taxes for the period
Analyze:
Which of the above taxes are paid by the employee and matched by the employer?
Compute the employer’s payroll taxes for the period. Use rates of 6.2 percent for the employer’s share of the social security tax,
1.45 percent for Medicare tax, 0.6 percent for FUTA tax, and 5.4 percent for SUTA tax. All earnings are taxable.
(Round "Rate" answers to 2 decimal places.)
 

 
Prepare a general journal entry to record the employer’s payroll taxes for the period.
(Round your answers to 2 decimal places.)
 

 
Which of the taxes are paid by the employee and matched by the employer?
 

   
 
Problem 11.2A Computing employer's social security tax, Medicare tax, and unemployment taxes. LO 11-2, 11-3
A payroll summary for Mark Consulting Company, owned by Mark Fronke, for the quarter ending June 30, 2019, appears below.
The firm made the required tax deposits as follows
 
For April taxes, paid on May 15.
For May taxes, paid on June 17.
 

Date Wages Paid			Total Earnings			Social Security Tax Deducted			Medicare Tax Deducted			Income Tax Withheld
April	8		$	2,282.00		$	141.48		$	33.09		$	226.00
	15			2,370.00			146.94			34.37			233.00
	22			2,282.00			141.48			33.09			226.00
	29			2,326.00			144.21			33.73			230.00
			$	9,260.00		$	574.11		$	134.28		$	915.00
May	5		$	2,238.00		$	138.76		$	32.45		$	222.00
	12			2,282.00			141.48			33.09			226.00
	19			2,282.00			141.48			33.09			226.00
	26			2,326.00			144.21			33.73			230.00
			$	9,128.00		$	565.93		$	132.36		$	904.00
June	2		$	2,370.00		$	146.94		$	34.37		$	233.00
	9			2,282.00			141.48			33.09			226.00
	16			2,326.00			144.21			33.73			230.00
	23			2,282.00			141.48			33.09			226.00
	30			2,238.00			138.76			32.45			222.00
			$	11,498.00		$	712.87		$	166.73		$	1,137.00
Total			$	29,886.00		$	1,852.91		$	433.37		$	2,956.00

 

Social security	6.2	percent
Medicare	1.45
FUTA	0.6
SUTA	5.4

Required:
Using the tax rates given above, and assuming that all earnings are taxable, make the general journal entry on April 8, 2019,
to record the employer’s payroll tax expense on the payroll ending that date.
Prepare the entries in general journal form to record deposit of the employee income tax withheld and the social security and Medicare taxes
(employee and employer shares) on May 15 for April taxes and on June 17 for May taxes.
(For all requirements round your answers to 2 decimal places.)
 
 

   
Problem 11.4A Computing and recording unemployment taxes; completing Form 940. LO 11-6, 11-7
Certain transactions and procedures relating to federal and state unemployment taxes follow for Fancy Nancy LLC,
a retail store owned by Nancy Roberts. The firm’s address is 2007 Trendsetter Lane, Dallas, TX 75268-0967.
The firm’s phone number is 972-456-1200.The employer’s federal and state identification numbers are 75-9462315 and 37-9462315, respectively.
Carry out the procedures as instructed in each of the following steps.
 

Name of Employee	Total Earnings
Terri Roma	$	5,960
Jo Guyton		3,925
Gloria Bermudez		4,248
Susie Scott		5,420
Anita Thomas		4,150
Terri Wong		3,060
Total	$	26,763

Required:
Compute the state unemployment insurance tax owed on the employees’ wages for the quarter ended March 31, 2019.
This information will be shown on the employer’s quarterly report to the state agency that collects SUTA tax.
The employer has recorded the tax on each payroll date. Although the state charges a 5.4 percent unemployment tax rate,
Fancy Nancy LLC’s rate is only 1.7 percent because of its experience rating. The employee earnings for the first quarter are shown above.
 
All earnings are subject to SUTA tax.
On April 30, 2019, the firm issued a check to the state employment commission for the amount computed above.
In general journal form, record the issuance of the check.
Compute the state unemployment insurance tax owed on the employees’ wages for the quarter ended March 31, 2019.
This information will be shown on the employer’s quarterly report to the state agency that collects SUTA tax.
The employer has recorded the tax on each payroll date. Although the state charges a 5.4 percent unemployment tax rate,
Fancy Nancy LLC’s rate is only 1.7 percent because of its experience rating. The employee earnings for the first quarter are shown above.
All earnings are subject to SUTA tax.
(Round ''Rate" answer to 3 decimal places. i.e., 12.3%  should be entered as 0.123)
 


   
Problem 11.5A Computing and recording unemployment taxes; completing Form 940. LO 11-6, 11-7
Certain transactions and procedures relating to federal and state unemployment taxes follow for Fancy Nancy LLC,
a retail store owned by Nancy Roberts. The firm’s address is 2007 Trendsetter Lane, Dallas, TX 75268-0967.
The firm’s phone number is 972-456-1200.The employer’s federal and state identification numbers are 75-9462315
and 37-9462315, respectively. Carry out the procedures as instructed in each of the following steps.

Assume that all wages have been paid and that all quarterly payments have been submitted to the state as required.
The payroll information for 2019 appears below. The federal tax deposits were submitted as follows: a deposit of $158.78 on April 21,
a deposit of $332.64 on July 22, and a deposit of 60.66 on October 21.
 

Quarter Ended		Total Wages Paid				Wages Paid in Excess of $7,000			State Unemployment Tax Paid
Mar.	31		$	26,463.00			–0–			$	449.87
June	30			59,600.00			4,160.00				942.48
Sept.	30			30,900.00			20,790.00				171.87
Dec.	31			33,200.00			29,900.00				56.10
Totals			$	150,163.00		$	54,850.00			$	1,620.32

Required:
In general journal form, record issuance of a check on January 28, 2020, for the balance of FUTA tax due for 2019.
(Round your answers to 2 decimal places.)
 
(33200 – 29900 x .006)

   
Problem 11.6A Computing and recording workers' compensation insurance premiums. LO 11-8
The following information relates to Ponte Manufacturing Company’s workers’ compensation insurance premiums for 2019. On January 15, 2019,
the company estimated its premium for workers’ compensation insurance for the year on the basis of that data.  
 

Work Classification	Amount of Estimated Wages			Insurance Rates
Office work	$	57,000		$	0.40/$100
Shop work		301,000		$	5.00/$100

Required:
Compute the estimated premiums.
Record in general journal form payment of the estimated premium on January 15, 2019.
On January 4, 2020, an audit of the firm’s payroll records showed that it had actually paid wages of $62,960 to its office employees
and wages of $308,320 to its shop employees. Compute the actual premium for the year and the balance due the insurance company or the credit due the firm.
Prepare the general journal entry on December 31, 2019, to adjust the Workers’ Compensation Insurance Expense account.

Analyze:
If all wages were attributable to shop employees, what premium estimate would have been calculated and recorded on January 15, 2019?
 

 

 

 

 
 
In 1990, Riverbed Company completed the construction of a building at a cost of $2,300,000 and first occupied it in January 1991.
It was estimated that the building will have a useful life of 40 years and a salvage value of $69,000 at the end of that time.
Early in 2001, an addition to the building was constructed at a cost of $575,000. At that time, it was estimated that the remaining
 life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years and
a salvage value of $23,000. In 2019, it is determined that the probable life of the building and addition will extend to the end of 2050,
or 20 years beyond the original estimate
Compute the annual depreciation to be charged, beginning with 2019. (Round answer to 0 decimal places, e.g. 45,892.)

$27,816
   
Tamarisk Corp. purchased machinery for $333,900 on May 1, 2017. It is estimated that it will have a useful life of 10 years,
salvage value of $15,900, production of 254,400 units, and working hours of 25,000. During 2018, Tamarisk Corp.
uses the machinery for 2,650 hours, and the machinery produces 27,030 units.
From the information given, compute the depreciation charge for 2018 under each of the following methods.
(Round intermediate calculations to 2 decimal places, e.g. 5.25 and final answers to 0 decimal places)

(a) Straight-line
(b) Units-of-output
(c) Working hours
(d) Sum-of-the-years'-digits
(e) Declining-balance (use 20% as the annual date)
 
(a) Straight-line                                 $31,800
(b) Units-of-output                          $33,787.50
(c) Working hours                            $33,708
(d) Sum-of-the-years'-digits         $53,964
(e) Declining-balance (use 20% as the annual date)           $57,876

(a) 333,900 - 15,900 = 318,000; 318,000 / 10 = 31,800


(b) 318,000 / 254,400 units = 1.25            27,030 x 1.25 = 33,787.50


(c) 318,000 / 25,000 hours = 12.72
      2,650 hrs. x 12.72 = 33,708


(d) 10 + 9 + 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1 = 55
       10/55 x 318,000 x 1/3 = 19,273
        9/55 x 318,000 x 2/3 = 34,691
       19,273 + 34,691 = 53,964

(e) 333,900 x 0.20 x 1/3 = 22,260
      333,900 - (333,900 x 0.20)] x 0.20 x 2/3 = 35,616
      22,260 + 35,616 = 57,876
   
Coolidge Company owes $1,000 for merchandise inventory purchased from Ross Company during April. The amount
owed is now past-due. On June 15, Coolidge meets with Ross and convinces Ross to accept $400 cash and a 30-day,
10 percent, $600 note payable to replace the account payable. Prepare the June 15 journal entry for Coolidge entry by
selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
 
Debit Accounts Payable                1,000
Credit Cash                                                         400
Credit Notes Payable                                     600
   
In 1990, Riverbed Company completed the construction of a building at a cost of $2,300,000 and first occupied it in
January 1991. It was estimated that the building will have a useful life of 40 years and a salvage value of $69,000 at
the end of that time. Early in 2001, an addition to the building was constructed at a cost of $575,000. At that time,
it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years,
and that the addition would have a life of 30 years and a  salvage value of $23,000. In 2019, it is determined that the
probable life of the building and addition will extend to the end of 2050, or  20 years beyond the original estimate.
Using the straight-line method, compute the annual depreciation that would have been charged from 1991 through 2000.

$ 55,775
 
2,300,000 - 69,000) / 40 = 55,775
   
On September 1, Vicario, Inc., borrows $100,000 from First National Bank at 6 percent annual interest.
This note is due in 90 days. Prepare the September 1 journal entry for Vicario by selecting the account names
from the drop-down menus and entering the dollar amounts in the debit or credit columns.
 
Debit Cash                                          100,000
Credit Notes Payable                                     100,000
   
On March 1, a designer received a check for $7,500 from a customer for services to be provided after the customer
chooses a color scheme for the first floor of her house. On July 31, the designer completed the design work for this
customer. Prepare the July 31 journal entry by selecting the account names from the drop-down menus and entering the
dollar amounts in the debit or credit columns.
 
Debit Unearned Revenue            7,500
Credit Service Revenue                 7,500
   
In 1990, Riverbed Company completed the construction of a building at a cost of $2,300,000 and first occupied it in January 1991.
It was estimated that the building will have a useful life of 40 years and a salvage value of $69,000 at the end of that time.
Early in 2001, an addition to the building was constructed at a cost of $575,000. At that time, it was estimated that the remaining
life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years and a
salvage value of $23,000. In 2019, it is determined that the probable life of the building and addition will extend to the end of 2050,
or 20 years beyond the original estimate.
Compute the annual depreciation that would have been charged from 2001 through 2018.
 
$74,175

2,300,000 - 69,000) / 40 = 55,775
575,000 - 23,000) / 30 = 18,400
55,775 + 18,400 = 74,175
 
   
On February 13, a jewelry store sells an engagement ring with a sales price of $10,000 to a nervous young man, who pays in cash.
The sale is subject to a 9.75 percent sales tax. Prepare the revenue portion of the February 13 by selecting the account names
from the drop-down menus and entering the dollar amounts in the debit or credit columns.
 
Debit Cash                                          10,975
Credit Sales                                                        10,000
Credit Sales Tax Payable                               975