Martinez Hardware Company’s payroll for November 2017 is summarized below. Amoun

Question

Martinez Hardware Company’s payroll for November 2017 is summarized below.

Amount Subject to Payroll Taxes

Unemployment Tax

Payroll

Wages Due

FICA

Federal

State

Factory

Sales

Administrative

Total

Account Titles and Explanation

Debit

Credit

(To record salaries and wages expense.)

(To record payroll tax expense.)

(To record salaries and wages expense.)

(To record payroll tax expense.)

(To record salaries and wages expense.)

(To record payroll tax expense.)

Martinez Hardware Company’s payroll for November 2017 is summarized below.

Amount Subject to Payroll Taxes

Unemployment Tax

Payroll

Wages Due

FICA

Federal

State

Factory $128,000 $128,000 $37,400 $37,400 Sales 32,900 32,900 4,300 4,300 Administrative 35,200 35,200    Total $196,100 $196,100 $41,700 $41,700
At this point in the year, some employees have already received wages in excess of those to which payroll taxes apply. Assume that the state unemployment tax is 2.5%. The FICA rate is 7.65% on an employee’s wages to $118,500 and 1.45% in excess of $118,500. Of the $196,100 wages subject to FICA tax, $19,900 of the sales wages is in excess of $118,500. Federal unemployment tax rate is 0.8% after credits. Income tax withheld amounts to $14,700 for factory, $7,000 for sales, and $6,000 for administrative.

Explanation / Answer

Answer 1. Factory Sales Administrative Total Salaries & Wages                             128,000                                            32,900                                35,200                      196,100 FICA Taxes                                  9,792                                              1,283                                  2,693                        13,768 ($128,000 x 7.65%) ($19,900 x 1.45%) + ($32,900 -$19,900) x 7.65% ($35,200 x 7.65%) FUTA Taxes                                     299                                                    34                                         -                                334 ($37,400 x 0.8%) ($4,300 x 0.8%) SUTA Taxes                                     935                                                  108                                         -                             1,043 ($37,400 x 2.50%) ($4,300 x 2.50%) Total Cost                             139,026                                            34,325                                37,893                      211,244 Answer 2. Journal Entry Date Particuars Dr. Amt. Cr. Amt Factory Payroll 11/30/17 Salary & Wages Expense - Factory          128,000 FICA Tax Payable              9,792 Income Tax Withheld Payable            14,700 Salaries & Wages Payable          103,508 (To record salaries & Wages expenses) 11/30/17 Payroll Tax - Factory            11,026 FICA Tax Payable              9,792 FUTA Payable                  299 SUTA Payable                  935 (To record the payroll tax expense) Sales Payroll 11/30/17 Salary & Wages Expense - Sales            32,900 FICA Tax Payable              1,283 Income Tax Withheld Payable              7,000 Salaries & Wages Payable            24,617 (To record salaries & Wages expenses) 11/30/17 Payroll Tax - Sales              1,425 FICA Tax Payable              1,283 FUTA Payable                    34 SUTA Payable                  108 (To record the payroll tax expense) Administrative Payroll 11/30/17 Salary & Wages Expense - Administrative            35,200 FICA Tax Payable              2,693 Income Tax Withheld Payable              6,000 Salaries & Wages Payable            26,507 (To record salaries & Wages expenses) 11/30/17 Payroll Tax - Administrative              2,693 FICA Tax Payable              2,693 FUTA Payable                     -   SUTA Payable                     -   (To record the payroll tax expense)

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