Question

Widmer Company had gross wages of $246,000 during the week ended June 17. The amount of wages subject to social security tax was $221,400, while the amount of wages subject to federal and state unemployment taxes was $31,000. Tax rates are as follows: Social security 6.0% Medicare 1.5% State unemployment 5.4% Federal unemployment 0.8% The total amount withheld from employee wages for federal taxes was $49,200. If an amount box does not require an entry, leave it blank. If required, round answers to two decimal places.

a. Journalize the entry to record the payroll for the week of June 17.

b. Journalize the entry to record the payroll tax expense incurred for the week of June 17.

Answer 1

a.

Date	General Journal	Debit	Credit
June 17	Wages expense	$246,000
	Social security tax payable		$13,284
	Medicare tax payable		$3,690
	Federal income tax payable		$49,200
	Wages payable		$179,826
	( To record payroll expense)

b.

Date	General Journal	Debit	Credit
June 17	Payroll tax expense	$18,896
	Social security tax payable		$13,284
	Medicare tax payable		$3,690
	State unemployment tax payable		$1,674
	Federal unemployment tax payable		$248
	( To record payroll expense)

Wages subject to social security tax = $221,400

Social security tax payable =  Wages subject to social security tax x Social security tax rate

= 221,400 x 6%

= $13,284

Medicare tax payable = Waged expense x Medicare tax rate  

= 246,000 x 1.5%

= $3,690

Wages subject to state unemployment and Federal unemployment taxes = $31,000

State unemployment tax payable = Wages subject to state unemployment and Federal unemployment taxes x State unemployment tax rate

= 31,000 x 5.4%

= $1,674

Federal unemployment tax payable = Wages subject to state unemployment and Federal unemployment taxes x Federal tax rate

= 31,000 x 0.8%

= $248

Kindly comment if you need further assistance.

Thanks‼!