In: Accounting
Caribbean Tours' total payroll for the month of January was $520,000. The following withholdings, fringe benefits, and payroll taxes apply:
Federal and state income tax withheld | $ | 52,000 | |
Health insurance premiums paid by employer (payable to Blue Cross) | 9,360 | ||
Contribution to retirement plan paid by employer (payable to Fidelity) | 20,800 | ||
FICA tax rate (Social Security and Medicare) | 7.65 | % | |
Federal and state unemployment tax rate | 6.20 | % | |
Assume that none of the withholdings or payroll taxes has been paid by the end of January (record them as payables), and no employee's cumulative wages exceed the relevant wage bases.
Required:
1. Record the employee salary expense,
withholdings, and salaries payable.
2. Record the employer-provided fringe
benefits.
3. Record the employer payroll taxes.
Record the necessary entry for the scenarios given above. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Date | General Journal | Debit | Credit |
January 31 | |||
ANSWER:
No. |
General Journal |
Debit |
Credit |
1 |
Salary expenses |
$520,000 |
|
To Federal and state income tax withheld |
$52,000 | ||
To Health Insurance Payable |
$9,360 |
||
To FICA Tax payable (520,000 * 7.65%) |
$39,780 |
||
To Salaries Payable (520000 – 52000 – 9360 – 39780) |
$418,860 |
||
(To record the employee salary expense, withholdings and salaries payable) |
|||
2 |
No journal entry required for the employer-provided fringe benefits. |
||
3 |
Employee payroll tax expense |
$72,020 |
|
To Federal and state unemployment tax payable ($520,000 * 6.20%) |
$32,240 |
||
To FICA Tax payable (520,000 * 7.65%) |
$39,780 |
||
(To record the employer's payroll taxes expense) |