BMX Company has one employee. FICA Social Security taxes are 6.20% of the first

Question

BMX Company has one employee. FICA Social Security taxes are 6.20% of the first $110,100 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX. its FUTA taxes are 0.80% and SUTA taxes are 2.90% of the first $7,000 paid to its employee. Prepare the employer's September 30 journal entry to record salary expense and its related payroll liabilities for this employee. The employee s federal income taxes withheld by the employer are $248.00 for this pay period. (Round your answers to 2 decimal places.)

Explanation / Answer

FICA social security taxes = 1,600 * 6.2% = $99.2

FICA Medicare taxes = 1,600 * 1.45% =$ 23.2

Fdral income tax withheld = $248

Total $ 370.4

Journal entry

Salaries expense $1,600

FICA social security taxes payable $99.2

FICA medicare taxes payable $23.2

Income tax payable $248

Salaries payable $1,229.6

As SUTA and FUTA are applicable on first 7,000 so the income to be taxed = 7,000 - 6,400= $600

FUTA = .80 * 600 = $4.8

SUTA = 2.9% * 600 = $ 17.4

Journal entry

Payroll expense $144.6

FICA social security taxes payable $99.2

FICA medicare taxes payable $23.2

FUTA taxes payable $4.8

SUTA taxes payable $17.4

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