Cedarville Company pays its office employee payroll weekly. Below is a partial list of employees and their payroll data for August. Because August is their vacation period, vacation pay is also listed.
Earnings to Weekly Vacation Pay to Be
Employee July 31 Pay Received in August
Mark Hamill $4,200 $200 —
Karen Robbins 3,500 150 $300
Brent Kirk 2,700 110 220
Alec Guinness 7,400 250 —
Ken Sprouse 8,000 330 660
Assume that the federal income tax withheld is 10% of wages. Union dues withheld are 2% of wages. Vacations are taken the second and third weeks of August by Robbins, Kirk, and Sprouse. The state unemployment tax rate is 2.5% and the federal is 0.8%, both on a $7,000 maximum. The FICA rate is 7.65% on employee and employer on a maximum of $113,700 per employee. In addition, a 1.45% rate is charged both employer and employee for an employee’s wages in excess of $113,700.
Make the journal entries necessary for each of the four August payrolls. The entries for the payroll and for the company’s liability are made separately. Also make the entry to record the monthly payment of accrued payroll liabilities.