Question

Calculation and Journal Entry for Employer Payroll Taxes

Portions of the payroll register for Barney's Bagels for the week ended July 15 are shown below. The SUTA tax rate is 5.4%, and the FUTA tax rate is 0.6%, both of which are levied on the first $7,000 of earnings. The Social Security tax rate is 6.2% on the first $128,400 of earnings. The Medicare rate is 1.45% on gross earnings.

Barney's Bagels
Payroll Register
	Total Taxable Earnings of All Employees
Total Earnings	Unemployment Compensation	Social Security
$12,400	$10,500	$12,400

1. Calculate the employer's payroll taxes expense.
$

2. Prepare the journal entry to record the employer's payroll taxes expense for the week ended July 15 of the current year.

Page:  

	DATE	ACCOUNT TITLE	DOC. NO.	POST. REF.	DEBIT	CREDIT
1	20-- July 15	Payroll Taxes Expense					1
2		Social Security Tax Payable					2
3		Medicare Tax Payable					3
4		FUTA Tax Payable					4
5		SUTA Tax Payable					5

Answer 1

1

Particulars	Taxable salaries	× tax rate	Employer tax share
FICA Social security	$           12,400	6.20%	$          768.80
FICA Medicare	$           12,400	1.45%	$          179.80
FUTA tax	$           10,500	0.60%	$            63.00
SUTA tax	$           10,500	5.40%	$          567.00
Total payroll tax			$      1,578.60

2

Payroll tax and benefit expense	$        1,578.60
FICA Social security payable		$           768.80
FICA Medicare payable		$           179.80
FUTA tax payable		$             63.00
SUTA tax payable		$           567.00
(employer payroll tax and benefit expense)