Question

A company pays its one employee $3,000 per month. This company’s FUTA rate is 0.8% on the first $7,000 earned; its SUTA rate is 4.0% on the first $7,000; its Social Security tax rate is 6.2% of the first $110,100; and its Medicare tax rate is 1.45% of all amounts earned. The entry to record this company’s March payroll includes what amount for total payroll taxes expense? Please explain

Answer 1

Particulars	Taxable salaries	× tax rate	Employer tax share
FICA tax	$              3,000	6.20%	$          186.00
Medicare	$              3,000	1.45%	$            43.50
FUTA	$              1,000	0.80%	$              8.00
SUTA	$              1,000	4.00%	$            40.00
Total payroll tax			$          277.50

Account	Debit	Credit
Payroll tax and benefit expense	$           229.50
FICA tax payable		$           186.00
Medicare payable		$             43.50
SUTA payable		$                8.00
FUTA Medicare payable		$             40.00
(employer payroll tax and benefit expense)

FUTA and SUTA is payable on 1,000 of march wages as 6,000 limit used in jan and feb.

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