In: Accounting
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.
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%) |