Question

In: Accounting

The payroll of Oriole Company for September 2019 is as follows. Total payroll was $506,000, of...

The payroll of Oriole Company for September 2019 is as follows.

Total payroll was $506,000, of which $112,000 is exempt from Social Security tax because it represented amounts paid in excess of $128,400 to certain employees. The amount paid to employees in excess of $7,000 (the maximum for both federal and state unemployment tax) was $434,000. Income taxes in the amount of $76,700 were withheld, as was $9,100 in union dues. The state unemployment tax is 3.5%, but Oriole Company is allowed a credit of 2.3% by the state for its unemployment experience. Also, assume that the current FICA tax is 7.65% on an employee’s wages to $128,400 and 1.45% in excess of $128,400. No employee for Oriole makes more than $135,000. The federal unemployment tax rate is 0.8% after state credit.

Prepare the necessary journal entries if the wages and salaries paid and the employer payroll taxes are recorded separately.

Solutions

Expert Solution

Particulars Amount Debit Amount Credit
Salaries & Wages Expense A/c ____________Dr. $        506,000
To Withholding Taxes payable A/c $            76,700
To FICA taxes payable A/c $            30,141 (506000-112000)*7.65%
To Union dues payable A/c $              9,100
To Cash A/c $          390,059
Payroll tax expenses A/c ____________Dr. $          31,581
To FICA taxes payable A/c $            30,141
To FUTA taxes payable A/c $                 576 (506000-434000)*0.8%
To SUTA taxes payable A/c $                 864 (506000-434000)*(3.5%-2.3%)

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