Question

On January 8, the end of the first weekly pay period of the year, Regis Company's payroll register showed that its employees earned $21,760 of office salaries and $70,840 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes at the rate of 6.20%, FICA Medicare taxes at the rate of 1.45%, $12,860 of federal income taxes, $1,460 of medical insurance deductions, and $860 of union dues. No employee earned more than $7,000 in this first period.

Required:
1.1 Calculate below the amounts for each of these four taxes of Regis Company. Regis’s merit rating reduces its state unemployment tax rate to 5% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.60%. (Round your answers to 2 decimal places.)
  
1.2 Prepare the journal entry to record Regis Company's January 8 (employee) payroll expenses and liabilities. (Round your answers to 2 decimal places.)
  2. Prepare the journal entry to record Regis’s (employer) payroll taxes resulting from the January 8 payroll. Regis’s merit rating reduces its state unemployment tax rate to 5% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.60%. (Round your answers to 2 decimal places.)

Answer 1

				Employer
			Gross Salary	Tax expense
FICA Social Secutity Tax			92600	5741.2
FICA Medicare Tax			92600	1342.7
State Unemployment tax			92600	4630
Federal Unemployment tax			92600	555.6
Note: FICA social secutiry tax is 6.20% equivalent to employee contribution
Note: FICA Medicare tax is 1.45% irrespective of amount of salaries
Note: For first $7000 of each employee salaries, State and Federal unemployment tax is charged
Journal entries for Payroll expense
Office Salaries and Wages Account Dr.					21760
Sales salaries and wages Account Dr.					70840
FICA Social secutity tax payable (92600*6.20%)						5741.2
FICA Medicare tax payable (92600*1.45%)						1342.7
Federal Income tax payable						12860
Medical Insurance payable						1460
Employee Union Account						860
Salaries and wages payable						70336.1
Journal entry for Payroll Tax expense
Payroll Tax expense Account Dr.					12269.5
FICA Social secutity tax payable (92600*6.20%)						5741.2
FICA Medicare tax payable (92600*1.45%)						1342.7
State Unemployment tax payable						4630
Federal Unemployment tax payable						555.6