Ravello Company\'s first weekly pay period of the year ends on January 8. On tha
ID: 2351224 • Letter: R
Question
Ravello Company's first weekly pay period of the year ends on January 8. On that date, the column totals in Ravello's payroll register indicate its sales employees earned $20,160, its office employees earned $70,840, and its delivery employees earned $3,000. The employees are to have withheld from their wages FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $12,760 of Federal income taxes, $1,350 of medical insurance deductions, and $820 of union dues. No employee earned more than $7,000 in the first pay period.Required
1. Calculate FICA Social Security taxes payable and FICA Medical taxes payable. Prepare the journal entry to record Ravello Company's January 8 (employee) payroll expenses and liabilities.
2. Prepare the journal entry to record Ravello's (employer) payroll taxes resulting from the January 8 payroll. Ravello's merit rating reduces its state unemployment tax rate if 2% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.8%.
*Please explain how you get your answer and make sure that it is 100% correct.
Thank you,
Explanation / Answer
"Calculate FICA Social Security taxes payable and FICA Medicare taxes payable" FICA SS=(60,840+25,760).062=5,369.20 FICA Med=(60,840+25,760).0145=1,255.70 "Prepare the journal entry to record Regal Company’s January 8 (employee) payroll expenses and liabilities." Since this will not format right I hope you understand that DR= Debit and CR=Credit. Jan 8 Office Salaries Expense DR 25,760 Sales Salaries Expense DR 60,840 Withholding Tax Payable CR 12,960 FICA SS Tax Payable CR 5,369.20 FICA Med Tax Payable CR 1,255.70 Med Insurance Payable CR 1,390.00 Union Dues Payable CR 920.00 Cash CR 64,705.10 Prepare the journal entry to record Regal’s (employer) payroll taxes resulting from the January 8 payroll. Regal’s merit rating reduces its state unemployment tax rate to 2% of the first $7,000 paid each employee. The federal unemployment tax rate is .80%. Jan 8 Payroll tax Expense DR 9,049.70 FICA SS Tax Payable CR 5,369.20 FICA Med Tax Payable CR 1,255.70 *Federal Unemployment tax payable CR 692.80 *State Unemployment Tax Payable CR 1,732.00 FICA SS and FICA Med are a straight match to the employees portion (well except this year in real life). Since no employees have reached the first $7,000 The State unemployment and federal unemployment are calculated on the entire gross wages which is 60,840+25,760=86,600 86,600*.02=1,732 86,600*.008=692.80
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