Bob Company purchased equipment on January 1, 2011 for $80,000. It is estimated that the equipment

Feb 3rd, 2012
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Bob Company purchased equipment on January 1, 2011 for $80,000. It is estimated that the equipment will have a $8,000 salvage value at the end of its 4-year useful life. It is also estimated that the equipment will produce 288,000 units over its 4-year life. Respond to the following independent questions in the space provided Bob earns a salary of $5,000 per month during the year. FICA taxes are 8% on the first $100,000 of gross earnings. Federal unemployment insurance taxes are 6.2% of the first $7,000; however, a credit is allowed equal to the state unemployment insurance taxes of 5.2% on the $7,000. During the year, $12,800 was withheld for federal income taxes and 6% of Bob’s salary was withheld for state income taxes. Instructions (a) Prepare a journal entry summarizing the payment of Bob’s total salary during the year. (b) Prepare a journal entry summarizing the employer payroll tax expense on Bob’s salary for the year. (c) Determine the cost of employing Bob for the year.

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