Question

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $128,400 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 5.4% of the first $7,000 paid to its employee.

Gross Pay through August 31 Gross Payfor September

A. $ 5,9 00 a. $ 1,400

B. 3,400 b. 3,500

C.123,500 c. 9,400

Taxes to be Withheld From Gross Pay (Employee-Paid Taxes) September Earnings Subject to Tax Tax Rate Tax Amount Federal income tax $80.00 FICA—Medicare FICA—Social Security

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

Answer 1

Taxes to be withheld from gross Pay (Employee – Paid Taxes)
	September earnings subject to tax (a)	Tax rate (b)	Tax Amount (a x b)
Federal Income tax			$80.00
FICA – Social Security tax	$1,400.00	6.20%	$86.80
FICA – Medicare tax	$1,400.00	1.45%	$20.30
Total taxes withheld			$187.10

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Journal entry to record salaries expense and its related payroll liabilities
Date	General Journal	Debit	Credit
Sept. 30	Salaries Expense	$1,400.00
	Employee Federal Income tax Payable		$80.00
	FICA - Social Security taxes Payable		$86.80
	FICA - Medicare taxes Payable		$20.30
	Salaries Payable               [Gross Salary – Deductions = $1,400 - $80 - $86.80 - $20.30]		$1,212.90
	(To record accrued salaries and related payroll liabilities)

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