Question

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.

Answer 1

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