P13-6 Payroll and Payroll Taxes Bailey Dry Cleaners has six employees who were p
ID: 2434118 • Letter: P
Question
P13-6 Payroll and Payroll Taxes Bailey Dry Cleaners has six employees who were paid the following wages during 2010: Frank Johnson $ 27,000 Bill Long 18,000 Duff Morse 105,000 Laura Stewart 28,000 Cindy Sharp 26,000 Melissa Ledbetter 20,000 Total $224,000 The estate allows the company a 1% unemployment compensation merit-rating reduction from the normal rate of 5.4%. The federal unemployment rate is 0.8%. The maximum unemployment wages per employee are $7,000 for both the state and the federal government. Income tax withholdings of 20% are applied to all employees. An 8% FICA. Tax for both employees and employers is applied to the first $100,000 of each employee’s wages. 1. Calculate the amount of payroll taxes to be paid by Bailey. 2. Prepare the journal entries to record the payment of payroll and the payroll tax expense.Explanation / Answer
WagesExpense 224,000 Income TaxPayable 44,800 FICA TaxPayable 17,520 Cash 161,680 Payroll TaxExpense 18,612 Unemployment TaxPayable 1,092 FICA TaxPayable 17,520
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