Classic: Employment Compensation and Employees Essay

Submitted By chrisfan18
Words: 464
Pages: 2

EXERCISE 13-8

Salaries and Wages Expense
480,000

Withholding Taxes Payable

80,000
FICA Taxes Payable*

28,040
Union Dues Payable

9,000
Cash

362,960
*[($480,000 – $140,000) X 7.65% = $26,010]


$140,000 X 1.45% = $2,030; $26,010 + $2,030 = $28,040


Payroll Tax Expense
29,440

FICA Taxes Payable

28,040
(See previous computation.)


FUTA Taxes Payable


[($480,000 – $410,000) X .8%)

560
SUTA Taxes Payable


[$70,000 X (3.5% – 2.3%)]

840



EXERCISE 13-5

(a)

2012


To accrue the expense and liability for vacations



Salaries and Wages Expense
8,640




Salaries and Wages Payable

8,640
(1)








To accrue the expense and liability for sick pay



Salaries and Wages Expense
5,184




Salaries and Wages Payable

5,184
(2)








To record sick leave paid



Salaries and Wages Payable
3,456
(3)



Cash

3,456



EXERCISE 13-5 (Continued)



2013


To accrue the expense and liability for vacations



Salaries and Wages Expense
9,360




Salaries and Wages Payable

9,360
(4)








To accrue the expense and liability for sick pay



Salaries and Wages Expense
5,616




Salaries and Wages Payable

5,616
(5)








To record vacation time paid



Salaries and Wages Expense
648




Salaries and Wages Payable
7,776
(6)



Cash

8,424
(7)








To record sick leave paid



Salaries and Wages Expense
144




Salaries and Wages Payable
4,536
(8)



Cash

4,680
(9)

(1)
9 employees X $12.00/hr. X 8 hrs./day X 10 days =
$8,640

(2)
9 employees X $12.00/hr. X 8 hrs./day X 6 days =
$5,184

(3)
9 employees X $12.00/hr. X 8 hrs./day X 4 days =
$3,456

(4)
9 employees X $13.00/hr. X 8 hrs./day X 10 days =
$9,360

(5)
9 employees X $13.00/hr. X 8 hrs./day X 6 days =
$5,616

(6)
9 employees X $12.00/hr. X 8 hrs./day X 9 days =
$7,776

(7)
9 employees X $13.00/hr. X 8 hrs./day X 9 days =
$8,424

(8)
9 employees X $12.00/hr. X 8 hrs./day X (6–4) days =
$1,728


9 employees X $13.00/hr. X 8 hrs./day X (5–2) days =
+2,808
= $4,536
(9)
9 employees X $13.00/hr. X 8 hrs./day X 5 days =
$4,680


Note: Vacation days and sick days are paid at the employee’s current wage. Also, if employees earn vacation pay at different pay rates, a consistent pattern of recognition (e.g., first-in, first-out) could be employed which liabilities have been paid.

EXERCISE 13-5 (Continued)

(b) Accrued liability at year-end:


2012

2013

Vacation Wages Payable

Sick Pay Wages Payable

Vacation Wages Payable

Sick Pay Wages Payable

Jan. 1 balance
$ 0

$ 0

$ 8,640

$1,728

+ accrued
8,640

5,184

9,360

5,616

– paid
( 0)

(3,456)

(7,776)

(4,536)

Dec. 31 balance
$8,640
(1)
$1,728
(2)
$10,224
(3)
$2,808
(4)

(1)
9 employees X $12.00/hr. X 8