Hair Affairs Reports the Following Payroll Information for May, 2010

question 84

Essay

Hair Affairs reports the following payroll information for May, 2010:
$\begin{array}{llll}\text { Type of } & \text { Gross } & \text { Federal Income } & \text { Savings Bonds } \\\text { Salary } & \text { Pay } & \text { Tax Withheld } & \text { Withheld }\\ \text { Sales } & \$ 10,000 &\$ 2,200 & \$ 200 \\\text { Office } & 3,000&600 & 300\\&\$13,000&\$2,800&\$500\end{array}$ Tax rate information follows:
$\begin{array}{llr} \text { FICA } &7.0\%\\ \text {Federal unemployment } &0.8\%\\ \text {State employment } &5.4\%\end{array}$
Assume that all wages are subject to all payroll taxes.
Required:
Prepare the journal entries to record the payment of the May, 2010, payroll and the payroll taxes imposed on the employer.

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Definitions:

Return on Investment

A financial metric evaluating the profitability or effectiveness of an investment, calculated by dividing net profit by the investment's cost.

Common Fixed Costs

Costs that do not change with the level of production or sales and are shared across different products or departments within a company.

Decision Making

The process of choosing among alternative courses of action or solutions to a problem in order to achieve a desired outcome.

Outside Supplier

An outside supplier is an external entity that provides goods or services to a company, typically not affiliated with the company’s internal supply chain.