Question

Kris Kringle Company has one employee who is paid a salary of $8,000 per month. Federal income tax withheld was $220. State income tax withheld was $60.The FICA social security tax rate is 6.2% and the FICA Medicare tax rate is 1.45%. The federal unemployment (FUTA) tax rate is 0.8% on the first $7,000 of wages. The state unemployment (SUTA) tax rate is 5.4% on the first $7,000 of wages. In addition, $590 of medical insurance was withheld from the employees pay.

Prepare Kringle’s journal entry to record the first month’s salary expense. Round to the nearest cent.

Date	Account Name	Debit	Credit

Prepare Kringle’s journal entry to record the employer’s payroll taxes for the first week’s payroll.

Date	Account Name	Debit	Credit

Bona Foodie Company has one employee who is paid a salary of $10,000 per month. Payroll information for the first month of the year is:

Federal income tax withheld	$3,600
FICA social security tax rate	6.2%
FICA medicare tax rate	1.45%
Federal unemployment (FUTA) tax rate  (on the 1st $7,000 of wages)	0.8%
State unemployment (SUTA) tax rate  (on the 1st $7,000 of wages)	5.4%
Medical insurance deduction (paid by employee)	$600

Part I: Prepare Bona Foodie Company’s journal entry to record the first month’s salary expense and employee withholdings. Payroll tax expense will be recorded in part 2.

Date	Account Name	Debit	Credit

Part 2: Prepare Bona Foodie Company’s journal entry to record employer payroll taxes for the first month’s payroll.

Date	Account Name	Debit	Credit

Answer 1

Krish Kringle
Particulars	Debit	Credit
Salary expense	$ 8,000.00
Federal income tax payable		$    220.00
State income tax payable		$       60.00
FICA medicare tax payable [$8,000 × 1.45%]		$    116.00
FICA social security tax payable [$8,000 × 6.2%]		$    496.00
Medical insurance payable		$    590.00
Salaries payable		$ 6,518.00
(Entry to record salary expense)
Payroll tax expense	$ 1,046.00
FICA medicare tax payable [$8,000 × 1.45%]		$    116.00
FICA social security tax payable [$8,000 × 6.2%]		$    496.00
FUTA payable [$7,000 × 0.8%]		$       56.00
SUTA payable [$7,000 × 5.4%]		$    378.00
(Entry to record payroll taxes)

Bona foodie
Particulars	Debit	Credit
Salary expense	$ 10,000.00
Federal income tax payable		$ 3,600.00
FICA medicare tax payable [$8,000 × 1.45%]		$    145.00
FICA social security tax payable [$8,000 × 6.2%]		$    620.00
Medical insurance payable		$    600.00
Salaries payable		$ 5,035.00
(Entry to record salary expense)
Payroll tax expense	$   1,199.00
FICA medicare tax payable [$10,000 × 1.45%]		$    145.00
FICA social security tax payable [$10,000 × 6.2%]		$    620.00
FUTA payable [$7,000 × 0.8%]		$       56.00
SUTA payable [$7,000 × 5.4%]		$    378.00
(Entry to record payroll taxes)

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