The following summary data for the payroll period ended December 27, 2015, are available for Cayman...

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The following summary data for the payroll period endedDecember 27, 2015, are available for Cayman Coating Co.:

Gross pay $ 98,000
FICA tax withholdings ?
Income tax withholdings 14,520
Group hospitalization insurance 1,200
Employee contributions to pension plan ?
Total deductions 29,319
Net pay ?

Additional information:
For employees, FICA tax rates for 2015 were 7.65% on the first$118,500 of each employee’s annual earnings. However, no employeeshad accumulated earnings for the year in excess of the $118,500limit.
For employers, FICA tax rates for 2015 were also 7.65% on thefirst $118,500 of each employee’s annual earnings.
The federal and state unemployment compensation tax rates are0.6% and 5.4%, respectively. These rates are levied against theemployer for the first $7,000 of each employee’s annual earnings.Only $14,600 of the gross pay amount for the December 27, 2015, payperiod was owed to employees who were still under the annuallimit.

1.
Required:
a-1. Assuming that Cayman Coating Co.'s payroll for the lastweek of the year is to be paid on January 3, 2016, use thehorizontal model to record the effects of the December 27, 2015,entries for Accrued payroll. (Use amounts with + for increases andamounts with – for decreases.)

2.
a-2. Assuming that Cayman Coating Co.'s payroll for the lastweek of the year is to be paid on January 3, 2016, record thejournal entry to show the effects of the December 27, 2015, entriesfor Accrued payroll. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.)

3.
b-1. Assuming that Cayman Coating Co.'s payroll for the lastweek of the year is to be paid on January 3, 2016, use thehorizontal model to record the effects of the December 27, 2015,entries for Accrued payroll taxes. (Use amounts with + forincreases and amounts with – for decreases.)
4.
b-2. Assuming that Cayman Coating Co.'s payroll for the lastweek of the year is to be paid on January 3, 2016, record thejournal entry to show the effects of the December 27, 2015, entriesfor Accrued payroll taxes. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.)

Answer & Explanation Solved by verified expert

4.3 Ratings (815 Votes)

Answer a.1
Gross Pay		$98,000.00
FICA tax withholding - $98000 X 7.65%	$ 7,497.00
Income Tax Witholdings	$ 14,520.00
Group hospitalization Insurance	$ 1,200.00
Employee Contributions to Pension Plan(balancing figure)	$ 6,102.00	$29,319.00
Net Pay		$68,681.00

Answer a.2
	Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.

27/12/2015	Wages & Salaries Exp. Dr.	$ 98,000.00
	To FICA Tax Witholdings		$ 7,497.00
	To Income Tax Witholdings		$ 14,520.00
	To Group Hospitalization Insurance		$ 1,200.00
	To Employee Contribution to Pension Plan		$ 6,102.00
	To Wages & Salaries Payable		$ 68,681.00
	(Record the accrued Payroll and Taxes)

Balance Sheet

Assets

Liabilities

Stockholders' Equity

Income Statement

Withholding Liabilities

Net Income

Revenues

Expenses

FICA tax withholding

$ 7,497.00

Retained Earnings

$(98,000.00)

Salearies & Wages exp.

$98,000.00

Income Tax Witholdings

$14,520.00

Group hospitalization Insurance

$ 1,200.00

Employee Contributions to Pension

$ 6,102.00

Wages & salaries Payable

$68,681.00

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Transcribed Image Text

The following summary data for the payroll period endedDecember 27, 2015, are available for Cayman Coating Co.: Gross pay $ 98,000FICA tax withholdings ?Income tax withholdings 14,520Group hospitalization insurance 1,200Employee contributions to pension plan ?Total deductions 29,319Net pay ? Additional information:For employees, FICA tax rates for 2015 were 7.65% on the first$118,500 of each employee’s annual earnings. However, no employeeshad accumulated earnings for the year in excess of the $118,500limit.For employers, FICA tax rates for 2015 were also 7.65% on thefirst $118,500 of each employee’s annual earnings.The federal and state unemployment compensation tax rates are0.6% and 5.4%, respectively. These rates are levied against theemployer for the first $7,000 of each employee’s annual earnings.Only $14,600 of the gross pay amount for the December 27, 2015, payperiod was owed to employees who were still under the annuallimit.1.Required:a-1. Assuming that Cayman Coating Co.'s payroll for the lastweek of the year is to be paid on January 3, 2016, use thehorizontal model to record the effects of the December 27, 2015,entries for Accrued payroll. (Use amounts with + for increases andamounts with – for decreases.)2.a-2. Assuming that Cayman Coating Co.'s payroll for the lastweek of the year is to be paid on January 3, 2016, record thejournal entry to show the effects of the December 27, 2015, entriesfor Accrued payroll. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.)3.b-1. Assuming that Cayman Coating Co.'s payroll for the lastweek of the year is to be paid on January 3, 2016, use thehorizontal model to record the effects of the December 27, 2015,entries for Accrued payroll taxes. (Use amounts with + forincreases and amounts with – for decreases.)4.b-2. Assuming that Cayman Coating Co.'s payroll for the lastweek of the year is to be paid on January 3, 2016, record thejournal entry to show the effects of the December 27, 2015, entriesfor Accrued payroll taxes. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.)