Question

1. Calculation of Taxable Earnings and Employer Payroll Taxes and Preparation of Journal Entry

   Selected information from the payroll register of Joanie's Boutique for the week ended September 14, 20--, is as follows: Social Security tax is 6.2% on the first $128,400 of earnings for each employee. Medicare tax is 1.45% of gross earnings. FUTA tax is 0.6% and SUTA tax is 5.4% on the first $7,000 of earnings.

   				Taxable Earnings
   Employee Name	Cumulative Pay Before Current Earnings		Current Gross Pay	Unemployment Compensation	Social Security
   Jordahl, Stephanie		$6,540	$1,210
   Keesling, Emily		6,230	1,080
   Palmer, Stefan		55,280	2,360
   Soltis, Robin		54,110	2,310
   Stout, Hannah		29,300	2,050
   Xia, Xu		127,310	3,600

   1. Calculate the amount of taxable earnings for unemployment, Social Security, and Medicare taxes.

   		Taxable Earnings
   Employee Name	Current Earnings	Unemployment Compensation	Social Security
   Jordahl, Stephanie	$	$	$
   Keesling, Emily
   Palmer, Stefan
   Soltis, Robin
   Stout, Hannah
   Xia, Xu
   Total	$	$	$

   Social Security tax	$
   Medicare tax
   FUTA tax
   SUTA tax
   Total employer payroll taxes	$

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   2. Prepare the journal entry to record the employer's payroll taxes as of September 14, 20--.

   Page:

   	DATE	ACCOUNT TITLE	DOC. NO.	POST. REF.	DEBIT	CREDIT
   1	20-- Sept. 14	Cash FUTA Tax Payable Payroll Taxes Expense Social Security Tax Payable SUTA Tax Payable					1
   2		Cash FUTA Tax Expense Medicare Tax Expense Social Security Tax Payable SUTA Tax Expense					2
   3		Cash FUTA Tax Expense Medicare Tax Payable Payroll Taxes Expense Social Security Tax Expense					3
   4		Cash FUTA Tax Payable Medicare Tax Expense Payroll Taxes Expense SUTA Tax Expense					4
   5		Cash FUTA Tax Expense Payroll Taxes Expense Social Security Tax Expense SUTA Tax Payable					5

Answer 1

1					Taxable Earnings
	Employee Name		Cumulative Pay Before Current Earnings	Current Gross Pay	Unemployment Compensation	Social Security	Medicare taxes
	Jordahl, Stephanie		$6,540	$1,210	460	$1,210	$1,210
					(7000-6540)
	Keesling, Emily		6,230	1,080	770	$1,080	$1,080
					(7000-6230)
	Palmer, Stefan		55,280	2,360	0	$2,360	$2,360
					(> $ 7000)
	Soltis, Robin		54,110	2,310	0	$2,310	$2,310
					(> $ 7000)
	Stout, Hannah		29,300	2,050	0	$2,050	$2,050
					(> $ 7000)
	Xia, Xu		127,310	3,600	0	1090	$3,600
					(> $ 7000)	(128400-127310)
	Total		$278,770	$12,610	$1,230	$10,100	$12,610
	Social Security tax at 6.2%					$626.20
						(10100*6.2%)
	Medicare tax at 1.45%						182.845
							(12610*1.45%)
	FUTA tax at 0.6%				7.38
					(1230*0.6%)
	SUTA tax				66.42
					(1230*5.4%)
	Total employer payroll taxes		(182.845+626.20+7.38+66.42)				$882.845
	Social Security tax limit is $ 128400
	Medicare tax is applicable with no limit
	FUTA and SUTA limit is $7000
2	Date	Account title				Debit	Credit
	20-- Sept. 14	Payroll Taxes Expense				882.845
		FUTA Tax Payable					7.38
		Social Security Tax Payable					626.2
		SUTA Tax Payable					66.42
		Medicare Tax Payable					182.845
		(to record the employer's payroll taxes)