Payroll entries. Total payroll of Walnut Co. was $1,840,000, of which $320,000 r

Question

Payroll entries. Total payroll of Walnut Co. was $1,840,000, of which $320,000 represented amounts paid in excess of $1018,500 to certain employees. The amount paid to employees in excess of $7,000 was $1,440,000. Income taxes withheld were $450,000. The state unemployment tax is 1.2%, the federal unemployment tax is .8%, and the F.I.C.A. tax is 7.65% on an employee's salaries and wages to $106,800 and 1.45% in excess of $118,500. Instructions (a) Prepare the journal entry for the salaries and wages paid. (b) Prepare the entry to record the employer payroll taxes.

Explanation / Answer

(a) Debit Salaries and Wages Expense $1,840,000

Credit Withholding Taxes Payable $450,000

Credit FICATaxesPayable $120,920*

Credit Cash $1,269,080*

[($1,840,000 – $320,000) × 0.0765]+ ($320,000 × 0.0145)

(b)Debit Payroll Tax Expense $128,920

Credit FICA Taxes Payable $120,920

($1,520,000 × 0.0765) + ($320,000 × 0.0145)

Credit FUTA Taxes Payable $3,200

[($1,840,000 – $1,440,000) × 0.008]

Credit SUTA Taxes Payable $4,800

($400,000 × 0.012)

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