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