Purnell, Inc., has a semimonthly payroll of $53,900 on September 15, 20xx. The total payroll is...

Purnell, Inc., has a semimonthly payroll of $53,900 on September 15, 20xx. The total payroll is taxable under FICA Taxes - HI; $50,400 is taxable under FICA Taxes - OASDI; and $7,300 is faxable under FUTA and SUTA. The state contribution rate for the company is 3.1%. The amount withheld for federal income taes is $6,995. The amount withheld for state income taxes is $1,010.

A) Journalize the payment of the wages, and record the payroll taxes on September 15.

B) Assume that the employees of Purnell, Inc., must also pay state contributions (disability insurance) of 1% on the taxable payroll of $24,200 and that the employees contributions are to be deducted by the employer. Journalize the September 15 payment of wages, assuming that the state contributions of the employees are kept in a separate account.

General Journal (please label columns using the following terms: date, account titles and explanation, debit, credit)

Expert Solution

Solution:-

A) Journalize the payment of the wages, and record the payroll taxes on September 15.

	Account	Debit	Credit
Payment of wages	Wages expense	$53,900
	FICA taxes payable - OASDI		= 53,900 * 6.2% = $3,341.8
	FICA taxes payable - HI		= 53,900 * 1.45% = $781.55
	Employees FIT payable		$6,995
	Employees SIT payable		$1,010
	Cash		= 53,900 - [ $3,341.8 + $781.55 + $6,995 + $1,010] = $41,771.65

Payroll taxes	Payroll Taxes	= $3,341.8 + $781.55 + $511 + $226.3 = $4,860.65
	FICA Taxes Payable-OASDI		= 53,900 * 6.2% = $3,341.8
	FICA Taxes Payable-HI		= 53,900 * 1.45% = $781.55
	FUTA Taxes Payable		= $7,300 * 7% = $511
	SUTA Taxes Payable		= $7,300 * 3.1% = $226.3

B) Assume that the employees of Purnell, Inc., must also pay state contributions (disability insurance) of 1% on the taxable payroll of $24,200 and that the employees contributions are to be deducted by the employer. Journalize the September 15 payment of wages, assuming that the state contributions of the employees are kept in a separate account.

Date	Account titles and explanation	Debit	Credit
September 15	Wages expense	$53,900
	FICA Taxes Payable-OASDI		= 53,900 * 6.2% = $3,341.8
	FICA Taxes Payable-HI		= 53,900 * 1.45% = $781.55
	Employees disability contributions payable		= $24,200 * 1% = $242
	Employees FIT payable		$6,995
	Employees SIT payable		$1,010
	Cash		= 53,900 - [ $3,341.8 + $781.55 + $242 + $6,995 + $1,010 ] = 53,900 - 12,370.35 = $41,529.65

ekkarill92 answered 2 years ago

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