Payroll Tax Entries According to a summary of the payroll of Brooks Industries C

Question

Payroll Tax Entries

According to a summary of the payroll of Brooks Industries Co., $1,100,000 was subject to the 6.0% social security tax and the 1.5% Medicare tax. Also, $50,000 was subject to state and federal unemployment taxes.


a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 4.2%; federal unemployment, 0.8%.

$__________



b. Journalize the entry to record the accrual of payroll taxes. If an amount box does not require an entry, leave it blank or enter "0".


Payroll Tax Expense ______________________ ________0___________

Social Security Tax Payable __________0____________ ___________________

Medicare Tax Payable __________0____________ ___________________

State Unemployment Tax __________0____________ ___________________

Federal Unemployment Tax __________0____________ ____________________

Explanation / Answer

a. social security tax and Medicare tax together make up FICA taxes. FICA taxes = ($1,100,000 x0.06) + ($1,100,000 x 1.5%)= $82,500 state unemployment tax = $50,000 x 0.042 = $2,100 federal unemployment tax = $50,000 x 0.008 = $400 Total payroll taxes = $82,500 + $2100 + $400= $85,100 b. journalize the entry to record the accrual of payroll taxes Dr FICA expense $82,500 Dr Federal unemployment tax $400 Dr State unemployment tax $2,100 Cr FICA tax payable $82,500 Cr Federal unemployment tax payable $400 Cr State unemployment tax payable $2,100

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