Flipper Company has a January 15 mid-month gross salaries expense of $25,000. Al

Question

Flipper Company has a January 15 mid-month gross salaries expense of $25,000. All is

subject to FICA Social Security (6.2%), FICA Medicare (1.45%), state income tax (5%)

and federal income tax (15%) withholdings. Additionally, all is subject to employer taxes

to include FUTA (0.8%) and SUTA (5.4%) taxes. (Round all calculations to the nearest

penny.)

Required:

a. Prepare the general journal entry to record the employer's payroll liability.

b. Prepare the general journal entry to record the employer's payroll tax liability.

c. Prepare the general journal entry to liquidate the liabilities accrued in parts (a)

and (b) on January 22.

Explanation / Answer

Answer:

b)

c)

a) Date Accounts & Explanation Debit Credit Calculations Jan-22 By Salary Expneses 25000 Employee federal income tax payble 3750 ($25,000*15%) Employee state income tax payble 1250 ($25,000*5%) FICA - Social Security Taxes payble 1550 ($25,000*6.2%) FICA - Medical Taxes Payble 362.5 ($25,000*1.45%) FUTA - Federal Unemployement Taxes Payble 200 ($25,000*0.8%) SUTA - State unemployement taxes Payble 1350 ($25,000*5.4%) Salary Payable 20287.5 {$25,000 - (3,750+1,250+1550+362.5+200+1350)} (To record the salary expense & payroll liabilities)

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