4. (3 points) The November 2017 payroll of Walnut Company is $4,200,000, of whic

Question

4. (3 points) The November 2017 payroll of Walnut Company is $4,200,000, of which $560,000 is exempt from Social Security tax because it represented amounts paid to certain employees in excess of $127,200. The amount paid to employees in excess of $7,000 was $3,950,000. Amounts withheld by Walnut were $906,000 for federal income taxes, $113,000 for state income taxes, $105,000 in charitable contributions, and $168,000 for 401-K employee contributions. Walnut’s effective state unemployment tax rate is 1.9% and the effective federal unemployment tax rate 0.6%. Prepare the journal entries Walnut should make to reflect its payroll expense and its payroll taxes expense.

Explanation / Answer

Salaries and Wages Expense 4200000        Federal income taxes payable 906000        State income taxes payable 113000        Charitable contributions payable 105000        401-K employee contributions payable 168000        FICA taxes payable 286580 =(4200000-560000)*7.65%+(560000*1.45%)        Salaries and Wages payable 2621420 Payroll Tax Expense 174250          FICA Taxes Payable 168000          FUTA Taxes Payable 1500 =(4200000-3950000)*0.6%          SUTA Taxes Payable 4750 =(4200000-3950000)*1.9%

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