The November 2017 payroll of Walnut Company is $4,200,000, of which $560,000 is exempt from Social Security tax because it represented amounts paid to certain employees in excess of $127,200.

The November 2017 payroll of Walnut Company is $4,200,000, of which $560,000 is exempt from Social Security tax because it represented amounts paid to certain employees in excess of $127,200. The amount paid to employees in excess of $7,000 was $3,950,000. Amounts withheld by Walnut were $906,000 for federal income taxes, $113,000 for state income taxes, $105,000 in charitable contributions, and $168,000 for 401-K employee contributions. Walnut’s effective state unemployment tax rate is 1.9% and the effective federal unemployment tax rate 0.6%. Prepare the journal entries Walnut should make to reflect its payroll expense and its payroll taxes expense.

Expert Solution

Salaries and Wages Expense	4200000
Federal income taxes payable		906000
State income taxes payable		113000
Charitable contributions payable		105000
401-K employee contributions payable		168000
FICA taxes payable		286580	=(4200000-560000)7.65%+(5600001.45%)
Salaries and Wages payable		2621420

Payroll Tax Expense	174250
FICA Taxes Payable		168000
FUTA Taxes Payable		1500	=(4200000-3950000)*0.6%
SUTA Taxes Payable		4750	=(4200000-3950000)*1.9%

ekkarill92 answered 2 years ago

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