Payroll Tax Entries According to a summary of the payroll of Bailik Co., 880,000

Question

Payroll Tax Entries

According to a summary of the payroll of Bailik Co., 880,000 was subject to the 6.0% social security tax and the 1.5% Medicare tax, Also $40,000 was subject to state and federal unemployment taxes.

A.   Calculate the employer's payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.8%. = $ _____________

B.   Journal the entry to record the accrual of payroll taxes.

      Payroll tax expense                   _________________

        Social Security Tax Payable                                        _________________

        Medical Tax Payable                                                   _________________

        State Unemployment Tax Payable                                ________________

         Federal Unemployment Tax Payable                          ________________                          

Explanation / Answer

A. Employer's Payroll Taxes State Unemployment Taxes $880,000X5.4%= $ 47,520 Federal Unemplyemnt Tax $880,000X0.8%= $ 7,040 Total Employer's Payroll Taxes $ 54560 B. Journal Entry Amount in $ Amount in $ Debit Credit Pay Roll Tax Expense                  880,000 Social Security Tax Payable                52,800 Medical Tax Payable                13,200 State Unemployment Tax payable                47,520 Federal Unemployment tax Payable                  7,040 Bank Account             759,440

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