Question

The following monthly data are taken from Ramirez Company at July 31: Sales salaries, $620,000; Office salaries, $124,000; Federal income taxes withheld, $186,000; State income taxes withheld, $41,500; Social security taxes withheld, $46,128; Medicare taxes withheld, $10,788; Medical insurance premiums, $15,000; Life insurance premiums, $12,000; Union dues deducted, $9,000; and Salaries subject to unemployment taxes, $66,000. The employee pays 40% of medical and life insurance premiums. Assume that FICA taxes are identical to those on employees and that SUTA taxes are 5.4% and FUTA taxes are 0.6%. 1&2.

Using the above information, complete the below table and prepare the journal entries to record accrued payroll and cash payment of the net payroll for July. 3. Using the above information, complete the below table. 4. Record the accrued employer payroll taxes and all other employer-paid expenses and the cash payment of all liabilities for July-assume that FICA taxes are identical to those on employees and that SUTA taxes are 5.4% and FUTA taxes are 0.6%.

Answer 1

1 &2
Calculation of the amount of premium paid by the employee and employer
	Total Premium	% paid by employees	Premium paid by employees	Premium paid by employers 60% x Total premium
Employee Medical Insurance Payable	$                  15,000.00	40.00%	6000	9000
Employee Life Insurance Payable	$                  12,000.00	40.00%	4800	7200
1) Journal entries for accrued payroll
Journal Entry	Debit	Credit
Sales Salaries Expense	$                620,000.00
Office Salaries Expense	$                124,000.00
FICA-Social Security Tax Payable		$               46,128.00
FICA-Medicare Tax Payable		$               10,788.00
Federal Income Tax Payable		$             186,000.00
Union dues deducted		$                 9,000.00
Employee Medical Insurance Payable		$                 6,000.00
Employee Life Insurance Payable		$                 4,800.00
State income tax withheld		$               41,500.00
Salaries Payable		$             439,784.00
2. Journal entry for the cash payment of net payroll
Salaries Payable	$                439,784.00
Cash		$             439,784.00
3. Calculate the unemployment tax amount
Tax	Amount subject toTax	Tax Rate	Tax Amount
State unemployment Tax Payable	66000	5.40%	3564
Federal unemployment Tax Payable	66000	0.60%	396
Journal entires for accrued employer payroll taxes.
Payroll Taxes Expense	$                  77,076.00
FICA-Social Security Tax Payable		$               46,128.00
FICA-Medicare Tax Payable		$               10,788.00
Employee Medical Insurance Payable		$                 9,000.00
Employee Life Insurance Payable		$                 7,200.00
State unemployment Tax Payable		$                 3,564.00
Federal unemployment Tax Payable		$                    396.00
4. Journal entries for cash payment of all liabilities related to the july payroll
FICA-Social Security Tax Payable	$                  46,128.00
FICA-Medicare Tax Payable	$                  10,788.00
Federal Income Tax Payable	$                186,000.00
Union dues deducted	$                    9,000.00
Employee Medical Insurance Payable	$                  15,000.00
Employee Life Insurance Payable	$                  12,000.00
State unemployment Tax Payable	$                    3,564.00
Federal unemployment Tax Payable	$                       396.00
State income tax withheld	$                  41,500.00
Cash		$             324,376.00