Lee Financial Services pays employees monthly. Payroll information is listed bel

Question

Lee Financial Services pays employees monthly. Payroll information is listed below for January 2018, the first month of Lee's fiscal year. Assume that none of the employees exceeded any relevant wage base.

Required:
Calculate the income and payroll taxes for the January 2018 pay period. Prepare the appropriate journal entries to record salaries and wages expense (not paid) and payroll tax expense for the January 2018 pay period.

Salaries $ 550,000 Federal income taxes to be withheld 110,000 Federal unemployment tax rate 0.60 % State unemployment tax rate (after FUTA deduction) 5.40 % Social security tax rate 6.20 % Medicare tax rate 1.45 %

Explanation / Answer

Solution: Journal Particulars Debit Credit Salaries and wages expenses 5,50,000.00 Withholding taxes payable 1,10,000.00 Social Security Taxes Payable (550000*6.2%)      34,100.00 Medicare Taxes payable (550000*1.45%)        7,975.00 Salaries and wages payabl(net) 3,97,925.00 Payroll Tax Expenses (Total)      75,075.00 Social Security Taxes Payable      34,100.00 Medicare Taxes Payable        7,975.00 Federal Unemployment tax payable (550000*0.60%)        3,300.00 State unemployment tax payable (550000*5.40%)      29,700.00

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