Question

In: Accounting

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $128,400 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay.



BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $128,400 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to its employee.

  Gross Pay through
August 31
  Gross Pay for September  
a.   $ 6,000       $ 1,500    
b.     2,750         2,850    
c.     123,600         9,500    
 

rev: 05_16_2019_QC_CS-168714

Assuming situation (a), prepare the employer’s September 30 journal entries to record the employer’s payroll taxes expense and its related liabilities.

Solutions

Expert Solution

Employer Payroll
taxes
September
Earnings Subject
to Tax
Tax Rate Tax Amount
FICA - Social Security $ 1,500 6.20% $ 93
FICA - Medicare $ 1,500 1.45% $ 21.75
FUTA $ 1,000
($7,000 (-) $ 6,000)
0.60% $ 6
SUTA $ 1,000
($7,000 (-) $ 6,000)
5.40% $ 54
Total taxes withheld $ 174.75
Date General Journal Debit Credit
Sep-30 Payroll taxes expense $ 174.75
            FICA - Social Security taxes payable $ 93
            FICA - Medicare taxes payable $ 21.75
            Federal unemployment taxes payable $ 6
            State unemployment taxes payable $ 54
(To record the Payroll taxes expense and its related liabilities)

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