Question

[The following information applies to the questions displayed below.]

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.		$	5,300				$	2,600
b.			2,400					2,500
c.			122,900					8,800

rev: 05_16_2019_QC_CS-168714

Compute BMX’s amounts for each of these four taxes as applied to the employee’s gross earnings for September under each of three separate situations (a), (b), and (c). (Round your answers to 2 decimal places.)

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[The following information applies to the questions displayed below.]

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.		$	5,300				$	2,600
b.			2,400					2,500
c.			122,900					8,800

rev: 05_16_2019_QC_CS-168714

Assuming situation (a), prepare the employer’s September 30 journal entries to record salary expense and its related payroll liabilities for this employee. The employee’s federal income taxes withheld by the employer are $70 for this pay period.

Answer 1

1
a)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	2600	6.20%	161.20
FICA-Medicare	2600	1.45%	37.70
FUTA	1700	0.60%	10.20
SUTA	1700	5.40%	91.80
b)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	2500	6.20%	155.00
FICA-Medicare	2500	1.45%	36.25
FUTA	2500	0.60%	15.00
SUTA	2500	5.40%	135.00
c)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	5500	6.20%	341.00
FICA-Medicare	8800	1.45%	127.60
FUTA	0	0.60%	0.00
SUTA	0	5.40%	0.00
Note: Earnings taxable for FUTA and SUTA in (a) = 7000-5300 = $1700
Note: Earnings taxable for Social Security in (c) = 128400-122900 = $5500
2
Taxes to be Withheld From Gross Pay (Employee-Paid Taxes)
	September Earnings Subject to Tax	Tax Rate	Tax Amount
Federal income tax			70.00
FICA—Social Security	2600	6.20%	161.20
FICA—Medicare	2600	1.45%	37.70
Total taxes withheld			268.90
Date	General Journal	Debit	Credit
Sep 30	Salaries expense	2600.00
	FICA—Social Security taxes payable		161.20
	FICA—Medicare taxes payable		37.70
	Employee federal income taxes payable		70.00
	Salaries payable		2331.10