Question

A company has three employees. Total salaries for the month of March were $8,000. The federal income tax rate for all employees is 15%. The FICA—Social Security tax rate is 6.2% and the FICA—Medicare tax rate is 1.45%.

A. Calculate the amount of employee taxes withheld
B. Prepare the company's journal entry to record the March payroll assuming these were the only deductions.
C. Prepare the April 1 journal entry to record the cash payment of salaries.
D. Include a brief description/explanation for the journal entries
E. Provide an explanation of the next steps the company should complete to finish the payroll process for March. Since March is the end of the first quarter for the company, in your explanation, include the form the company should prepare and file with the IRS at the end of March (Hint: Employers are required to prepare and submit certain payroll reports and forms)

Answer 1

Answer- A:

Gross Pay	8000
Federal Income Tax Deduction (8000 * 15%)	1200
FICA- Social Security Tax Deduction (8000 * 6.2%)	496
FICA- Medicare Tax Deduction (8000* 1.45%)	116

Answer- B:

Date	Account Title and Explanation	Debit	Credit
Mar. 31	Salaries Expense	8000
	Employee Federal income Tax Payable		1200
	FICA- Social Security Tax Payable		496
	FICA- Medicare Tax Payable		116
	Salaries Payable		6188
	(To record the payroll of march)

Answer- C:

Date	Account Title and Explanation	Debit	Credit
Apr-01	Salaries Payable	6188
	Cash		6188
	(To record the payment of salaries for the month of March

Answer- D:

Date	Account Title and Explanation	Debit	Credit
Apr-01	Employee Federal income Tax Payable	1200
	FICA- Social Security Tax Payable	496
	FICA- Medicare Tax Payable	116
	Cash		1812
	(To record the remittance of payroll withholdings)