E13-6 (L01) (Payroll Tax Entries) The payroll of YellowCard Company for Septembe

Question

E13-6 (L01) (Payroll Tax Entries) The payroll of YellowCard Company for September 2016 is as follows. Total payroll was $480,000, of which $110,000 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 $400,000. Income taxes in the amount of $80,000 were withheld, as was $9 000 in union dues. The state unemploy ment tax is 3.5% but Yellowcard 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 S1 18,500 and 1.45% in excess of $118,500. No employee for Yellow Card makes more than $125,00. The federal unemployment tax rate is 0.8% after state credit. Instructions Prepare the necessary journal entries if the wages and salaries paid and the employer payroll taxes are recorded separately.

Explanation / Answer

13-6

Wages and salaries expense 480000 Cash 361100 Withholding taxes payable 80000 FICA taxes payable 29900 Union dues payable 9000 Payroll tax expense 31500 FICA taxes payable 29900 FUTA taxes payable
(480000-400000)*0.8% 640 SUTA taxes payable 960

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