Question

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $118,500 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 2.9% of the first $7,000 paid to its employee.

	Gross Pay through August					Gross Pay for September
a.		$	5,100				$	2,200
b.			18,800					2,700
c.			112,800					8,600

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 $80 for this pay period. (Round your answers to 2 decimal places.)

Prepare the employer's September 30 journal entry to record the accrued salary expense and its related payroll liabilities for this employee.

Answer 1

Case-a
Employee withholding from Gross Pay
Taxes			Earnings Sub. To tax	Tax rate	tax amount
Federal Income tax					80
FICA Social security tax	2200		6.20%	136.4
FICA Medicare tax		2200		1.45%	31.9
Total taxes withheld					248.3
Journal entry
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Salaries and wages expense		2200
	Federal Income tax payable			80
	FICA Social security tax payable		136.4
	FICA Medicare tax payable			31.9
	Salaries and wages payable			1951.7
	(for salaries accrued)
Case-b
Employee withholding from Gross Pay
Taxes			Earnings Sub. To tax	Tax rate	tax amount
Federal Income tax					80
FICA Social security tax	2700		6.20%	167.4
FICA Medicare tax		2700		1.45%	39.15
Total taxes withheld					286.55
Journal entry
S.no.	Accounts title and explanations		Debit $	Credit $
b.	Salaries and wages expense		2700
	Federal Income tax payable			80
	FICA Social security tax payable		167.4
	FICA Medicare tax payable			39.15
	Salaries and wages payable			2413.45
	(for salaries accrued)
Case-c
Employee withholding from Gross Pay
Taxes			Earnings Sub. To tax	Tax rate	tax amount
Federal Income tax					80
FICA Social security tax	5700		6.20%	353.4
FICA Medicare tax		8600		1.45%	124.7
Total taxes withheld					558.1
Journal entry
S.no.	Accounts title and explanations		Debit $	Credit $
c.	Salaries and wages expense		8600
	Federal Income tax payable			80
	FICA Social security tax payable		353.4
	FICA Medicare tax payable			124.7
	Salaries and wages payable			8041.9
	(for salaries accrued)