Accounting Journal Entry for Wages and Payroll Taxes
What were the liability accounts in Blossom Company's ledger on January 1, 2022?
Accounts Payable $44,800, Sales Taxes Payable $8,900, and Unearned Service Revenue $21,300.
Answer:
The liability accounts in Blossom Company's ledger on January 1, 2022, were Accounts Payable, Sales Taxes Payable, and Unearned Service Revenue.
On January 1, 2022, the ledger of Blossom Company contained these liability accounts: Accounts Payable $44,800, Sales Taxes Payable $8,900, and Unearned Service Revenue $21,300.
During January, the following selected transactions occurred:
- Sold merchandise for cash totaling $6,466, which includes 6% sales taxes.
- Paid state treasurer's department for sales taxes collected in December 2021. $8,900.
- Sold 730 units of a new product on credit at $45 per unit, plus 6% sales tax.
During January, the company's employees earned wages of $56,000. Withholdings related to these wages were $4,284 for Social Security (FICA), $5,593 for federal income tax, and $1,678 for state income tax.
On January 31, the journal entry for recording the wages and payroll tax expense incurred in January would be:
- Salaries and Wages Expense $56,000
- FICA Taxes Payable $4,284
- Federal Income Taxes Payable $5,593
- State Income Taxes Payable $1,678
- Salaries and Wages Payable $56,000
- Payroll Tax Expense $37
As of January 31, no entry had been recorded for the wages or payroll tax expense. The total wages and payroll tax expense of $66,592 will be recorded on January 31.