15. Excel Products Inc. pays its employees semimonthly. The summary of the payro

Question

15. Excel Products Inc. pays its employees semimonthly. The summary of the payroll for December 31, n icated the following Salaries expense Federal income tax withheld $120,000 20,000 For thc ycar cndcd Dcccmbcr 31, $40,000 of thc Dcccmbcr 31 payroll is subject to social sccurity tax of 6.0%; 120,000 is subject to Medicare tax of 1.5%, s 10,000 is subject to state unemployment tax of43% and federal unemployment tax of 0.8%. As of January 1, of the following year, all of the Si 20,000 is subject to all payroll taxes. Prepare the journal entries for payroll tax expensc if the employees arc paid (a) December 31 of the current year or (b) January 2 of the following year.

Explanation / Answer

a Payroll Tax Expense 4710          Social Security Tax Payable 2400 =40000*6%          Medicare Tax Payable 1800 =120000*1.5%           State Unemployment Tax Payable 430 =10000*4.3%           Federal Unemployment Tax Payable 80 =10000*0.8% b Payroll Tax Expense 15120          Social Security Tax Payable 7200 =120000*6%          Medicare Tax Payable 1800 =120000*1.5%           State Unemployment Tax Payable 5160 =120000*4.3%           Federal Unemployment Tax Payable 960 =120000*0.8%

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