Question

Required information

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $118,500 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid to its employee.

	Gross Pay through August					Gross Pay for September
a.		$	6,400				$	1,700
b.			20,100					4,000
c.			114,100					9,900

Exercise 11-6 Payroll-related journal entries LO P2

Assuming situation a, prepare the employer’s September 30 journal entries to record salary expense and its related payroll liabilities for this employee. The employee’s federal income taxes withheld by the employer are $60 for this pay period. (Round your answers to 2 decimal places.)

Answer 1

(a)	Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount	Explanation
	FICA-Social Security	1700	6.20%	$    105.40	Full amount is subject to Tax
	FICA-Medicare	1700	1.45%	$      24.65	Full amount is subject to Tax
	FUTA	600	0.60%	$        3.60	$1100 is over the maximum $7000
	SUTA	600	2.90%	$      17.40	$1100 is over the maximum $7000
		Total Payroll Taxes Expense		$        151.05
	Date	General Journal			Debit	Credit
	Sep 30	Salary Expense			$                                                  1,700.00
		FICA—Social sec. taxes payable				$     105.40
		FICA—Medicare taxes payable				$        24.65
		Federal Income tax payable				$        60.00
		Salary Payable				$ 1,509.95
		(For Employer Part only)
	Sep 30	Payroll taxes expense			$                                                      151.05
		FICA—Social sec. taxes payable				$     105.40
		FICA—Medicare taxes payable				$        24.65
		Federal unemployment taxes payable				$          3.60
		State unemployment taxes payable				$        17.40