e: ID: A 8. The following totals for the month of March were taken from the payr
ID: 2601070 • Letter: E
Question
e: ID: A 8. The following totals for the month of March were taken from the payroll register of the Foothill Company Salaries (all subject to social security and Medicare taxes) Federal income taxes withheld Medical insurance deductions Life insurance deductions Salaries subject to unemployment taxes Medicare tax rate Social security tax rate $14,000 3,500 700 400 11,000 1.45% 6.2% Prepare journal entries without explanations to record the following. Round amounts to the nearest dollar a. Monthly payroll b. Accrual of employer's payroll taxes (assuming the social sccurity and Medicare taxes to be equal to the amount for employees, a FUTA tax of 8 percent, and a state unemployment tax of 5.4 percent) General Journal Description Post.Debit Credit Ref DateExplanation / Answer
Here FICA tax includes social security tax and Medicare tax.
Social security tax = Gross salary × 6.2% rate
= $14,000 × 6.2%
= $868
Medicare tax = Gross pay × 1.45%
= $14,000 × 1.45%
= $203
Unemployment tax includes FUTA and SUTA.
FUTA = Salaries subject to tax × 0.8% = $11,000 × 0.8% = $88
SUTA = Salaries subject to tax × 0.8% = $11,000 × 5.4% = $594
a.
Journal of employee payroll
Date
Description
P.ref
Debit $
Credit $
March
Salaries wages expense
14,000
Withholding tax
3,500
Social security tax payable
868
Medicare tax payable
203
Medical insurance
700
Life insurance
400
Salaries and wages payable
8.329
b.
Journal of employer payroll
Date
Description
P.ref
Debit $
Credit $
March
Payroll tax expense
1,753
Social security tax payable
868
Medicare tax payable
203
FUTA
88
SUTA
594
Note: There are two-way obligation of social security tax and Medicare tax; it means both employer and employee are liable to pay such tax by the same amount; this is the reason why it appears in both the journals.
Date
Description
P.ref
Debit $
Credit $
March
Salaries wages expense
14,000
Withholding tax
3,500
Social security tax payable
868
Medicare tax payable
203
Medical insurance
700
Life insurance
400
Salaries and wages payable
8.329
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.