Question

The following monthly data are taken from Ramirez Company at July 31: Sales salaries, $640,000; Office salaries, $128,000; Federal income taxes withheld, $192,000; State income taxes withheld, $43,000; Social security taxes withheld, $47,616; Medicare taxes withheld, $11,136; Medical insurance premiums, $15,400; Life insurance premiums, $12,300; Union dues deducted, $8,400; and Salaries subject to unemployment taxes, $69,000. The employee pays 40% of medical and life insurance premiums.

Prepare journal entries to record (1) accrued payroll, including employee deductions for July; (2) cash payment of the net payroll (salaries payable) for July; (3) accrued employer payroll taxes, and other related employment expenses for July - assume that FICA taxes are identical to those on employees and that SUTA takes are 5.4% and FUTA taxes are 0.6% and (4) cash payment of all liabilities related to the July payroll.

Answer 1

Transaction	account titles and explanation	debit	credit
1	sales Salaries expense	640000
	Office Salaries expense	128000
	Social Security tax payable		47616
	Medicare tax payable		11136
	Employee federal income tax payable		192000
	Employee state income tax payable		43000
	Employee medical insurance premium payable (15400*40%)		6160
	Employee life insurance premium payable (12300*40%)		4920
	Employee union dues payable		8400
	Salaries payable (balancing figure)		454768
2.	Salaries payable	454768
	Cash		454768
3.	payroll tax expense	79512
	Social Security tax payable		47616
	Medicare tax payable		11136
	State unemployment tax payable (69000*5.40%)		3726
	Federal unemployment tax payable (69000*0.6%)		414
	Employee medical insurance premium payable (15400*60%)		9240
	Employee life insurance premium payable (12300*60%)		7380
4.	social security tax payable (47616+47616)	95232
	Medicare tax payable (11136+11136)	22272
	Employee federal income tax payable	192000
	Employee state income tax payable	43000
	Employee medical insurance payable	15400
	Employee life insurance payable	12300
	Employee union dues payable	8400
	State unemployment tax payable	3726
	Federal unemployment tax payable	414
	Cash		392744