Question
In: Accounting
Total payroll of Oriole Co. was $1,870,000, of which $280,000 represented amounts paid in excess of $128,400 to certain employees.
Total payroll of Oriole Co. was $1,870,000, of which $280,000 represented amounts paid in excess of $128,400 to certain employees. The amount paid to employees in excess of $7,000 was $1,420,000. Income taxes withheld were $438,000. The state unemployment tax is 1.2%, the federal unemployment tax is .8%, and the F.I.C.A. tax is 7.65% on an employee's salaries and wages to $128,400 and 1.45% in excess of $128,400.
Prepare the journal entry for the salaries and wages paid.
Prepare the entry to record the employer payroll taxes
Solutions
Expert Solution
| Solution: | |||
| Calculation of FICA | |||
| [$1,870,000 - $280,000] * 7.65% = $121,635 | |||
| [280,000*1.45%] = $4,060 | |||
| FICA Payable $125,695 | |||
| Journal entries | |||
| Date | Accounts titles and expalantion | Debit | Credit |
| 1 | Salaries and Wages expense | $1,870,000 | |
| Income tax withholding Payable | $438,000 | ||
| FICA Taxes Payable | $125,695 | ||
| Cash (balancing figure) | $1,306,305 | ||
| (Being Salaries and wages paid) | |||
| 2 | Payroll Tax expense (balancing figure) | $134,695 | |
| FICA taxes payble | $125,695 | ||
| FUTA taxes payable(1,870,000-1,420,000)*0.8% | $3,600 | ||
| SUTA taxes payable(1,870,000-1,420,000)*1.2% | $5,400 | ||
| (Being Payroll tax expenses recorded) | |||
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