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. $ 5,300 $ 2,600 b. 19,000 2,900 c. 113,000 8,800 Compute BMX’s amounts for each of these four taxes as applied to the employee’s gross earnings for September under each of three separate situations (a), (b), and (c). (Round your answers to 2 decimal places.)
	a) Tax September Earnings Subject to Tax Tax Rate Tax Amount FICA—Social Security FICA—Medicare FUTA SUTA b) Tax September Earnings Subject to Tax Tax Rate Tax Amount FICA—Social Security FICA—Medicare FUTA SUTA c) Tax September Earnings Subject to Tax Tax Rate Tax Amount FICA—Social Security FICA—Medicare FUTA SUTA

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 $70 for this pay period. (Round your answers to 2 decimal places.)

	Taxes to be Withheld From Gross Pay (Employee-Paid Taxes) September Earnings Subject to Tax Tax Rate Tax Amount Federal income tax $70.00

Journal entry worksheet

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

Note: Enter debits before credits.

	Date General Journal Debit Credit Sep 30

Assuming situation a, prepare the employer’s September 30 journal entries to record the employer’s payroll taxes expense and its related liabilities. (Round your answers to 2 decimal places.)

	Employer Payroll taxes September earnings subject to tax Tax Rate Tax Amount $0.00

Answer 1

a)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	2600	6.20%	161.20
FICA-Medicare	2600	1.45%	37.70
FUTA	1700	0.60%	10.20
SUTA	1700	2.90%	49.30
b)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	2900	6.20%	179.80
FICA-Medicare	2900	1.45%	42.05
FUTA	0	0.60%	0.00
SUTA	0	2.90%	0.00
c)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	5500	6.20%	341.00
FICA-Medicare	8800	1.45%	127.60
FUTA	0	0.60%	0.00
SUTA	0	2.90%	0.00
Note: Earnings taxable for FUTA and SUTA in (a) = 7000-5300 = 1700
Note: Earnings taxable for Social Security in (c) = 118500-113000 = $5500
2
Taxes to be Withheld From Gross Pay (Employee-Paid Taxes)
	September Earnings Subject to Tax	Tax Rate	Tax Amount
Federal income tax			70.00
FICA—Social Security	2600	6.20%	161.20
FICA—Medicare	2600	1.45%	37.70
Total taxes withheld			268.90
Date	General Journal	Debit	Credit
Sep 30	Salaries expense	2600.00
	FICA—Social Security taxes payable		161.20
	FICA—Medicare taxes payable		37.70
	Employee federal income taxes payable		70.00
	Salaries payable		2331.10
3
Employer Payroll taxes	September earnings subject to tax	Tax Rate	Tax Amount
FICA-Social Security	2600	6.20%	161.20
FICA-Medicare	2600	1.45%	37.70
FUTA	1700	0.60%	10.20
SUTA	1700	2.90%	49.30
Total Payroll Taxes Expense			258.40
Date	General Journal	Debit	Credit
Sep. 30	Payroll taxes expense	258.40
	FICA—Social security taxes payable		161.20
	FICA—Medicare taxes payable		37.70
	Federal unemployment taxes payable		10.20
	State unemployment taxes payable		49.30