Question
In: Accounting
Recording Payroll Taxes According to a summary of the payroll of Kirby Co., $180,000 in earnings...
Recording Payroll Taxes
According to a summary of the payroll of Kirby Co., $180,000
in earnings were subject to the 7.5% FICA tax. Also, $60,000 in
earnings were subject to state and federal unemployment
taxes.
a. Calculate the employer's payroll taxes, using the following
rates: state unemployment, 4.3%; federal unemployment, 0.8%.
$
b. Illustrate the effects on the accounts and financial
statements of recording the accrual of payroll taxes. If no account
or activity is affected, select "No effect" from the dropdown list
and leave the corresponding number entry box blank. Enter account
decreases and cash outflows as negative amounts.
Statement of Cash Flows
Balance Sheet
Income Statement
Assets
=
Liabilities
+
Stockholders' Equity
No effect
+
No effect
=
FICA tax payable
+
SUTA payable
+
FUTA payable
+
Retained earnings
Statement of Cash Flows
Income Statement
No effect
Payroll tax expense
Solutions
Expert Solution
a)
| Earnings were subject Unemployment Tax | 60,000 |
| Earnings were subject to FICA Tax | 180,000 |
| FICA Tax (180000*7.5%) | 13,500 |
| SUTA Tax (60000*4.3%) | 2,580 |
| FUTA Tax((60000*0.8%) | 480 |
| Assets | No Effect | |
| Liabilities: | ||
| FUTA Payable | Increase | 480 |
| SUTA Pyable | Increase | 2,580 |
| FICA Payable | Increase | 13,500 |
| Stock Holder's Equity | No Effect | |
| Statement of cash flow Statement | No Effect | |
| Income Statement | Increase | 16,560 |
Please note that the Equation Format given in the question is not clear. So I have mentioned Item wise the Effect in above table. You can take the values from the table and fill your assignment.
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ekkarill92 answered 1 year agoRelated Solutions
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$
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