(Payroll Tax Entries) The payroll of Grich Company for September 2014 is as foll
ID: 2646021 • Letter: #
Question
(Payroll Tax Entries) The payroll of Grich Company for September 2014 is
as follows.
Total payroll was $960,000, of which $220,000 is exempt from Social Security tax
because it represented amounts paid in excess of $102,000 to certain employees. The
amount paid to employees in excess of $7,000 was $800,000. Income taxes in the
amount of $180,000 were withheld, as was $18,000 in union dues.
The state unemployment tax is 3.5%, but Grich Company is allowed a credit of 2.3%
by the state for its unemployment experience. Also, assume that the current F.I.C.A.
tax is 7.65% on an employee
Explanation / Answer
SOLUTION:
From the Employee Side.
Wage and Salaries $960,000
Withholding tax payable $180,000
Union dues payable $18,000
F.I.C.A. tax payable $59,800
Cash $702,200
Calculation of F.I.C.A:
$220,000 was exempt and only taxed at the Medicare rate of 1.45% of $220,000 = $3,190
= ($960,000
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