1. The following monthly data are taken from Ramirez Company at July 31: Sales s
ID: 2485554 • Letter: 1
Question
1. The following monthly data are taken from Ramirez Company at July 31: Sales salaries, $200,000; office salaries, $160,000; federal income taxes withheld, $90,000; state income taxes withheld, $20,000; Social Security taxes withheld, $22,320; Medicare taxes withheld, $5,220; medical insurance premiums, $7,000; life insurance premiums, $4,000; union dues deducted, $1,000; and salaries subject to unemployement taxes, $50,000. The employee pays 40% of medical and life insurance premiums.
Prepare journal entries to record: (1) accrued payroll, including employee deductions for July; (2) cash payment of the net payroll (salaries payable) for July; (3) acrued employer payroll taxes, and other related employment expenses, for July- assume that FICA taxes are identical to those on employees and that SUTA taxes are 5.4% and FUTA taxes are 0.6% and (4) cash payment of all liabilities related to the July payroll.
2. On Jan. 8 the end of the first weekly pay period of the year, Regis Companys payroll register showed taht its emplyees earned $22,760 of office salaries and $65,840 of sales salaries. Withholdings from the employees salries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45% $12,860 of federal income taxes, $1,340 of medical insurance deductions, and $840 of union dues. No employees earned more than $7,000 in this first period.
Calculate FICA Social Security taxes payable and FICA Medicare taxes payable. Prepare the journal entry to record Regis Companys Jan. 8 (employee) Payroll expenses and liabilities (Round amounts to cents).
Prepare the journal entry to record REgis (employer) Payroll taxes resulting from the Jan. 8 payroll. Regis merit rating reduces its state unemployement tax rate of 4% of the first $7,000 paid each employee. The federal unemployement tax rate is 0.6% (Round amount to cents).
Explanation / Answer
Account Title Dr $ Cr $ 1 Sales Salaries Expense 200,000 Office Salaries Expense 160,000 Federal Income Tax Payable 90,000 State Income Tax Payable 20,000 FICA Taxes Payable 22,320 Medicare Tax Payable 5,220 Union Dues Payable 1,000 Medical Insurance Premium Payable 2,800 Life Insurance Premium Payable 1,600 Salaries Payable 217,060 ( ACCRUAL OF PAYROLL ) Cash 217,060 Salaries Payable 217,060 (cash payment salary) Payroll Taxes 37,140 FICA Taxes Payable 22,320 Medicare Tax Payable 5,220 Medical Insurance Premium Payable 4,200 Life Insurance Premium Payable 2,400 SUTA Payable 2,700 FUTA Payable 300 ( accrual of payroll taxes) Cash 179,080 FICA Taxes Payable 44,640 Medicare Tax Payable 10,440 Medical Insurance Premium Payable 7,000 Life Insurance Premium Payable 4,000 SUTA Payable 2,700 FUTA Payable 300 Federal Income Tax Payable 90,000 State Income Tax Payable 20,000 ( payment of payroll taxes) Account Title Dr $ Cr $ 2 Sales Salaries Expense 65,840 Office Salaries Expense 22,760 Federal Income Tax Payable 12,860 FICA Taxes Payable 5,493 Medicare Tax Payable 1,285 Medical Insurance Premium Payable 1,340 Union Dues Payable 840 Salaries Payable 66,782 ( ACCRUAL OF PAYROLL ) Cash 66,782 Salaries Payable 66,782 (cash payment salary) Payroll Taxes FICA Taxes Payable 5,493 Medicare Tax Payable 1,285 SUTA Payable 3,544 FUTA Payable 532 ( accrual of payroll taxes) Cash 32,671 FICA Taxes Payable 10,986 Medicare Tax Payable 2,569 Medical Insurance Premium Payable 1,340 SUTA Payable 3,544 FUTA Payable 532 Union Dues Payable 840 Federal Income Tax Payable 12,860 ( payment of payroll taxes)
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