Question

In: Accounting

According to a summary of the payroll of Guthrie Co., $720,000 was subject to the 6.0%...

According to a summary of the payroll of Guthrie Co., $720,000 was subject to the 6.0% social security tax and the 1.5% Medicare tax. Also, $60,000 was subject to state and federal unemployment taxes.

Required:
A. Calculate the employer’s payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.6%.
B. On December 31, journalize the entry to record the accrual of payroll taxes. Refer to the Chart of Accounts for exact wording of account titles.

Solutions

Expert Solution

A

Taxable amount Tax rate Tax amount
Social security    720,000 6%             43,200
Medicare    720,000 1.50%             10,800
SUTA      60,000 5.40%               3,240
FUTA      60,000 0.60%                  360
Employers payroll tax             57,600

B

Account Debit Credit
Payroll tax      57,600
Social security payable      43,200
Medicare payable      10,800
SUTA payable        3,240
FUTA payable           360

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