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.

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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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