E13-9B (Payroll Tax Entries) Bastop Company’s payroll for August 2014 is summarized below. Amount Subject to Payroll Taxes Unemployment Tax Payroll Wages Due F.I.C.A. Federal State Warehouse $206,000 $206,000 $60,000 $60,000 Sales 184,000 184,000 5,000 5,

E13-9B (Payroll Tax Entries) Bastop Company’s payroll for August 2014 is summarized below.

                                                                          Amount Subject to Payroll Taxes

                                                                                                Unemployment Tax

Payroll                 Wages Due                  F.I.C.A.             Federal                State

Warehouse          $206,000                  $206,000            $60,000           $60,000

Sales                      184,000                    184,000                5,000               5,000

Administrative          51,000                      51,000                    —                    —  

Total                     $441,000                  $441,000             $65,000            $65,000

At this point in the year some employees have already received wages in excess of those to which payroll taxes apply. Assume that the state unemployment tax is 2.5%. The F.I.C.A. rate is 7.65% on an employee’s wages to $102,000 and 1.45% in excess of $102,000. Of the $441,000 wages subject to F.I.C.A. tax, $30,000 of the sales wages and $25,000 of administrative wages are in excess of $102,000. Federal unemployment tax rate is 0.8% after credits. Income tax withheld amounts to $28,000 for factory, $31,000 for sales, and $9,000 for administrative.

Instructions

(a) Prepare a schedule showing the employer’s total cost of wages for August by function.

(b) Prepare the journal entries to record the factory, sales, and administrative payrolls including the employer’s payroll taxes.