Frado company provides you with following information related to payroll transac

Question

Frado company provides you with following information related to payroll transaction for the current month. The number below are for the all of the employees combined (there are 10 employees). Prepare journal entries to record the transactions for the current month. Record the May payroll using the payroll information given above. Remember to record social security and Medicine Medicare withholdings (note that the social security limit has not been reached yet). Recorded the employer's payroll taxes resulting from the payroll. The company has a state unemployment tax rate to 5.4 % of the first $7, 000 paid each employee and a federal unemployment tax rate of 0.8 % of the first $7, 000 paid each employee.

Explanation / Answer

Journal Entry

Working

Employee Deduction :

Social Security Tax payable = 6.2%*60000 = 3720

Medicare Tax payable = 1.45%*60000 = 870

Federal Income Tax withheld = 8200

State Income Tax witheld = 2100

Medical Insurance withheld = 800

Employer Payroll Tax Expenses :

Social Security Tax payable = 6.2%*60000 = 3720

Medicare Tax payable = 1.45%*60000 = 870

FUTA Tax Payable = 5.4%*60000 = 3240

SUTA Tax payable = 0.8%*60000 = 480

Account Title & Explaination Debit Credit Part a Salary & Wages Expenses 60000 Federal Income Tax withheld 8200 State Income Tax Withheld 2100 Medical Insurance withheld 800 Social Security Tax Withheld 3720 Medicare Tax Withheld 870 Cash 44310 Part b Payroll Tax Expenses 8310 Social Security Tax Payable 3720 Medicare Tax Payable 870 FUTA Payable 3240 SUTA Payable 480

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