Question

Vacation Destinations offers its employees the option of contributing up to 6% of their salaries to a voluntary retirement plan, with the employer matching their contribution. The company also pays 100% of medical and life insurance premiums. Assume that no employee's cumulative wages exceed the relevant wage bases. Payroll information for the first biweekly payroll period ending February 14 is listed below. Wages and salaries $ 1,300,000 Employee contribution to voluntary retirement plan 54,600 Medical insurance premiums paid by employer 27,300 Life insurance premiums paid by employer 5,200 Federal and state income tax withheld 325,000 Social Security tax rate 6.20 % Medicare tax rate 1.45 % Federal and state unemployment tax rate 6.20 % Required: 1. Record the employee salary expense, withholdings, and salaries payable. 2. Record the employer-provided fringe benefits. 3. Record the employer payroll taxes. Record the necessary entry for the scenarios given above. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Answer:
Date	Account Titles and Explanation	Debit (in $ )	Credit (in $ )
February - 14	Salaries Expenses	$ 1,300,000
	Income tax Payable		$ 325,000
	FICA Tax Payable                ( $ 1,300,000 x ( 6.2% + 1.45% )		$ 99,450
	Accounts Payable (Retirement Plan)		$ 54,600
	Salaries Payable - Balancing Figure		$ 820,950
	(To record the employee salary expense)
February - 14	Salaries Expenses - Balancing Figure	$ 87,100
	Accounts Payable   (Medical Insurance)		$ 27,300
	Accounts Payable   (Life insurance)		$ 5,200
	Accounts Payable (Retirement Plan)		$ 54,600
	(To record the employer-provided fringe benefits)
February - 14	Payroll tax expense	$ 180,050
	FICA Tax Payable                ( $ 1,300,000 x ( 6.2% + 1.45% )		$ 99,450
	Unemployment Tax Payable                ( $ 1,300,000 x 6.20% )		$ 80,600
	(To record the employer payroll taxes )