QS 11-5 Record employer payroll taxes. Denise Co. has five employees, each of wh

Question

QS 11-5 Record employer payroll taxes. Denise Co. has five employees, each of whom earns $3,000 per month and has been employed since January 1. FICA Social Security taxes are 6.2% of the first $102,000 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.8% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. Prepare the March 31 journal entry to record the March payroll taxes expense. *Please explain each step you had to take to answer this question. Thanks,

Explanation / Answer

FUTA and SUTA are only taxed on the first $ 7,000 earned. The employees have earned $ 6,000 each; $ 3,000 in each of January and February. So the FUTA and SUTA taxable amount for each of the employees in March is $ 1,000 . SUTA Payable = [ 5 x $ 1,000 x 0.054 ] = $ 270 FUTA Payable = [ 5 x $1,000 x 0.008 ] = $ 40

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