Pay roll entries. Total payroll of Walnut Co. was $2,760,000, of which $480,000

Question

Pay roll entries. Total payroll of Walnut Co. was $2,760,000, of which $480,000 represented amounts paid in excess of $118,500 to certain employees. The amount paid to employees in excess of $7,000 was $2,160,000. Income taxes withheld were $675,000. The state unemployment tax is 1.2%, the federal unemployment tax is .8%, and the F.I.C.A. tax is 7.65% on an employee's salaries and wages to $118,500 and 1.45% in excess of $118,500. Instructions

(a) Prepare the journal entry for the salaries and wages paid.

(b) Prepare the entry to record the employer payroll taxes.

Explanation / Answer

Salaries and Wages Expense 2760000         Withholding Taxes Payable 675000          FICA Taxes Payable 181380 =(2760000-480000)*7.65%+(480000*1.45%)          Cash 1903620 Payroll Tax Expense 193380          FICA Taxes Payable 181380          FUTA Taxes Payable 4800 =(2760000-2160000)*0.8%          SUTA Taxes Payable 7200 =(2760000-2160000)*1.2%

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