During January, Luxury Cruise Lines incurs employee salaries of $2.8 million. Wi

Question

During January, Luxury Cruise Lines incurs employee salaries of $2.8 million. Withholdings in January are $214,200 for the employee portion of FICA, $420,000 for federal income tax, $175,000 for state income tax, and $28,000 for the employee portion of health insurance (payable to Blue Cross/Blue Shield). The company incurs an additional $173,600 for federal and state unemployment tax and $84,000 for the employer portion of health insurance.

During January, Luxury Cruise Lines incurs employee salaries of $2.8 million. Withholdings in January are $214,200 for the employee portion of FICA, $420,000 for federal income tax, $175,000 for state income tax, and $28,000 for the employee portion of health insurance (payable to Blue Cross/Blue Shield). The company incurs an additional $173,600 for federal and state unemployment tax and $84,000 for the employer portion of health insurance.

Explanation / Answer

Journal Entry Date Particulars Dr. Amt. Cr. Amt 1 Salary Exp.                                                          Dr.          2,800,000 To FICA Payable              214,200 To Federal I Tax Withholding Payble              420,000 To State I Tax Withholding Payble              175,000 To Health Insurance Payble                28,000 To Salaries Payable          1,962,800 (Amt due - salaries ) 2 Payroll Taxes Payable                                   Dr.              257,600    To Unemployment Taxes Payable              173,600    To Health Insurance Payable                84,000 (Taxes due on salaries)

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