Alex Inc offers its employees free medical, dental and life insurance coverage.

Question

Alex Inc offers its employees free medical, dental and life insurance coverage. It also matches employee contribution to a voluntaryretirement plan dollar for dollar. Assume that no employee's wages exceed the relevant wage bases, Payroll information for the payroll period ending January 15 are below. Make the appropriate journal entries in good form to record the payroll.

#Wages and salaries $2,750,000

#Employee contributions to voluntary retirement paln $130,000

#Medical insurance premiums paid by employer $50,000

#Dental insurance premiums paid by employer $17,500

#Life insurance premiums paid by employer $8,750

#Federal and state income tax withheld $540,000

#FICA rate 7.65%

#Federal and state unemploment Tax rate 6.20%

Explanation / Answer

Journal Entry Date Particulars Dr. Amt. Cr. Amt. 15-Jan Salaries & Wages Expenses                 Dr.          2,750,000    To Federal & State Income Tax payable              540,000    To FICA Tax Payable              210,375 $2,750,000 X 7.65%    To Retirement Plan Payable              130,000    To Salaries & Wages Payable          1,869,625 (Record the payroll) 15-Jan Payroll Tax Expenses                               Dr.    To FICA Tax Payable              210,375 $2,750,000 X 7.65%    To FUTA & SUTA Payable              170,500 $2,750,000 X 6.20%    To Retirement Plan Payable              130,000    To Medical Insurance Payable                50,000    To Dental Insurance Payable                17,500    To Life Insurance Payable                  8,750 (Record the payroll taxes)

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