195. Drake Company pays its employees for two weeks of vacation each year. The total annual cost of the vacation benefit is $109,920. Prepare the journal entry to record the monthly accrued vacation expense.
196. Hollow Company provides you with following information for two of its employees. The company is subject to the following taxes.
Tax
|
Rate
|
Applied To
|
FICA—Social Security
|
6.20%
|
First $117,000
|
FICA—Medicare
|
1.45%
|
All gross pay
|
FUTA
|
0.60%
|
First $7,000
|
SUTA
|
3.20%
|
First $7,000
|
Compute amounts for each of these four taxes as applied to each employee’s gross earnings for November.
Gross Pay through October
|
Gross Pay for November
|
a. $6,400
|
$2,000
|
b. $112,000
|
$9,400
|
197. Deacon Company provides you with following information related to payroll transactions for the month of May. Prepare journal entries to record the transactions for May.
Office Salaries
|
Sales Salaries
|
Social Security
Taxes
|
Medicare Taxes
|
Federal Income Taxes
|
$38,000
|
$26,000
|
$3,968
|
$928
|
$5,600
|
a. Recorded the May payroll using the payroll register information given above.
b. Recorded the employer’s payroll taxes resulting from the May payroll. The company had a merit rating that reduces its state unemployment tax rate to 3.5% of the first $7,000 paid each employee. Only $42,000 of the current months salaries are subject to unemployment taxes. The federal rate is 0.6%.
c. Issued a check to Reliant Bank in payment of the May FICA and employee taxes.
d. Issued a check to the state for the payment of the SUTA taxes for the month of May.
e. Issued a check to Reliant Bank in payment of the employer’s quarterly FUTA taxes for the first quarter in the amount of $1,020.