Exercise 9-2, PartI A company\'s first weekly pay period of the year ends on Jan

Question

Exercise 9-2, PartI A company's first weekly pay period of the year ends on January 8. On that date, the column totals in its payroll register show that sales employees earned $30,000, and office employees earned $20,000 in salaries. The employees are to have withheld from their salaries FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $9,000 of federal income taxes, $2,000 of medical insurance deductions, and $1,000 of pension contributions. No employee earned more than $7,000 in the first pay period. Part 1) Compute FICA Social Security taxes payable and FICA Medicare taxes payable. Prepare the journal entry to record the company's January 8 (employee) payroll expenses and liabilities. Part II: Part 2) Prepare the journal entry to record the company's (employer) payroll taxes resulting from the January 8 payroll. Its merit rating reduces its state unemployment tax rate to 3.4% of the first $7,000 paid to each employee. The federal unemployment tax rate is 0.6%.

Explanation / Answer

Date Accounts title Dr Cr Ans a Sales salaries expenses $30,000 8-Jan Office salaries expenses $20,000 FICA-Social Security taxes payable (50000*6.2%) $3,100 FICA-Medicare taxes payable (50000*1.45%) $725 Employees Federal Income taxes payable $9,000 Medical Insurance payable $2,000 Penion deduction payable $1,000 Salaries Payable $34,175 (being payroll recorded) ans b Payroll tax expenses 5825 FICA-Social Security taxes payable (50000*6.2%) 3100 FICA-Medicare taxes payable (50000*1.45%) 725 State Unemployment Taxes payable (50000*3.4%) 1700 Federal Unemployment Taxes payable (50000*.6%) 300 (being payroll tax expense recorded)

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