Question

The following is related to payroll:

Federal taxes are 15%

State taxes are 5%

Medicare taxes are 1.45% on all wages

Social security taxes are 6.2% on the first $120,000 of income

The employee contributes 6% of gross wages to a 401K

and the employer matches it by 3%

the employee contributes 3% of salary to medical insurance and the company pays the rest

premium of $300

Finally, the company offers disability and life insurance and pays the premium of $30

Federal unemployment taxes are 6%

State unemployment taxes are 1%

Both of the unemployment taxes are on the first $7,000 of wages

One employee has been working at the company since Jan 1. and as of June 30 has made $120,000. In July he made $20,000.

Record journal entry for –

a.salary expenses

b.payroll tax expenses

Answer 1

Particulars	Debit	Credit
Salary/Wage Expenses	140000
To Federal Tax Payable		21000
To State Tax Payable		7000
To Medicare Tax Payable		2030
To Social Sec Tax Payable		7440
To Employer Contrib 401k Payable		4200
To Company's Contrib to Med Ins Payable		300
To Disablity & Life Insurance Payable		30
To Fed Unemployemnt Tax Payable		420
To State Unemployment Tax Payable		70
To Salary/Wage Payable		97510
Salary/Wage Payable	97510
To Employee Cont 401k		8400
To Employee Cont Meidcal Insurance		4200
To Cash		84910
Federal Tax Payable	21000
State Tax Payable	7000
Medicare Tax Payable	2030
Social Sec Tax Payable	7440
Fed Unemployemnt Tax Payable	420
State Unemployment Tax Payable	70
To Payroll Expenses A/c		37960

WORKINGS:

Gross Salary upto	120000
July	20000
Total	140000
Federal Tax	21000
State Tax	7000
Medicare Tax	2030
Social Sec Tax	7440
Employee Cont 401k	8400
Employer Contrib 401k	4200
Employee Cont Med Ins	4200
Company Contrib.	300
Disabl & life Insu	30
Fed Unemployment tax	420
State Unemployment Tax	70