Question

Payroll for Kicker Sound Systems for January was $150,000 and the following withholdings, fringe benefits, and payroll taxes apply:

Federal and state income taxes withheld                                     $38,000

Health insurance premiums (Blue Cross) paid by employer         12,000

Contribution to retirement plan (Fidelity) paid by employer        15,000

FICA tax rate (Social Security and Medicare)                               7.65%

Federal and state unemployment tax rate                                       3.80%

Kicker has paid none of the withholdings or payroll taxes by the end of January and no employee's cumulative wages exceed the relevant wage bases.

1. Record the employee salary expense, withholdings, and salaries payable.
2. Record the employer-provided fringe benefits.
3. Record the employer payroll taxes.

Answer 1

Date	Account Titles and explanation	Debit (in $)	Credit (in $)
Jan-31	Salaries expense	$150,000
	Income tax payable		$38,000
	FICA tax payable               ($150,000 × 7.65%)		$11,475
	Salaries payable		$100,525
	(To record the salary expense, withholdings, and salaries payable.)
Jan-31	Salaries expense	$27,000
	Accounts payable - Blue Cross		$12,000
	Accounts payable - Fidelity		$15,000
	(To record the employer-provided fringe benefits)
Jan-31	Payroll tax expense	$17,175
	FICA tax payable                ($150,000 × 7.65%)		$11,475
	Unemployment tax payable                ($150,000 × 3.80%)		$5,700
	(To record the Payroll tax expense)