The payroll of Indigo Company for September 2016 is as follows. Total payroll wa

Question

The payroll of Indigo Company for September 2016 is as follows. Total payroll was $464,000, of which $118,000 is exempt from Social Security tax because it represented amounts paid in excess of $118,500 to certain employees. The amount paid to employees in excess of $7,000 was $418,000. Income taxes in the amount of $86,000 were withheld, as was $8,500 in union dues. The state unemployment tax is 3.5%, but Indigo Company is allowed a credit of 2.3% by the state for its unemployment experience. Also, assume that the current FICA tax is 7.65% on an employee's wages to $118,500 and 1.45% in excess of $118,500. No employee for Indigo makes more than $125,000. The federal unemployment tax rate is 0.8% after state credit. required, select "No Entry" for the account titles and enter O for the amounts Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit To record wages and salaries paid) (To record employer payroll taxes)

Explanation / Answer

Salaries and Wages Expense 464000          Withholding Income Taxes Payable 86000          FICA Taxes Payable 28180 =(464000-118000)*7.65%+(118000*1.45%)          Union Dues Payable 8500          Cash 341320 Payroll Tax Expense 29100          FICA Taxes Payable 28180         SUTA Taxes Payable 552 =(464000-418000)*(3.5%-2.3%)         FUTA Taxes Payable 368 =(464000-418000)*0.8%

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