QUESTION 8 Payroll entries The Ajax Company has a gross payroll of $20,000 per day. Withholdings for PAYG taxes are $6,000 per day. There are no other deductions from employees' earnings. The firm works five days per week, Monday to Friday inclusive. The payroll period covers Thursday to Wednesday inclusive and the payroll for the week is paid on the following Friday. Gross payroll consists of $12 000 direct labour, $3000 indirect factory labour, $3000 selling expenses and $2000 general and administrative expenses each day. The following calendar should be used to answer the questions: (a) What is the total amount to be credited to Accrued Payroll in respect of July earnings? (b) If balance day adjustments are performed at the end of each month, what would be the balance in Accrued Payroll account at the close of business on July 31? (c) Suppose that a single journal entry is made on the last day of each month to record the distribution of total labour costs for the month, but that entries are made each Friday to record payment of wages and withholdings. Also, PAYG taxes withheld are remitted to the Taxation Department at the end of each month. (i) Show the weekly journal entry. (ii) Construct the necessary ledger accounts to show all entries in respect of labour costs during the month of July.
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