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# Calculation of Taxable Earnings and Employer Payroll Taxes and Preparation of Journal Entry Selected information from...

Calculation of Taxable Earnings and Employer Payroll Taxes and Preparation of Journal Entry

Selected information from the payroll register of Joanie's Boutique for the week ended September 14, 20--, is as follows: Social Security tax is 6.2% on the first $128,400 of earnings for each employee. Medicare tax is 1.45% of gross earnings. FUTA tax is 0.6% and SUTA tax is 5.4% on the first$7,000 of earnings.

 Taxable Earnings Employee Name Cumulative Pay Before Current Earnings Current Gross Pay Unemployment Compensation Social Security Jordahl, Stephanie $6,500$1,220 Keesling, Emily 6,010 1,070 Palmer, Stefan 55,200 2,380 Soltis, Robin 54,460 2,320 Stout, Hannah 28,710 2,060 Xia, Xu 127,300 3,660

1. Calculate the amount of taxable earnings for unemployment, Social Security, and Medicare taxes.

 Taxable Earnings Employee Name Current Earnings Unemployment Compensation Social Security Jordahl, Stephanie  $Keesling, Emily Palmer, Stefan Soltis, Robin Stout, Hannah Xia, Xu Total$ 
 Social Security tax $Medicare tax FUTA tax SUTA tax Total employer payroll taxes$

2. Prepare the journal entry to record the employer's payroll taxes as of September 14, 20--.

Page:
DATE ACCOUNT TITLE DOC.
NO.
POST.
REF.
DEBIT CREDIT
1 20--
Sept. 14
1
2 2
3 3
4 4
5 5

## Solutions

##### Expert Solution

 1 Current Taxable Earnings Earnings Unemployment Social Employee Name Compensation Security Jordahl, Stephanie 1220 500 1220 Keesling, Emily 1070 990 1070 Palmer, Stefan 2380 0 2380 Soltis, Robin 2320 0 2320 Stout, Hannah 2060 0 2060 Xia, Xu 3660 0 1100 Total 12710 1490 10150 Social Security tax 629.30 =10150*6.2% Medicare tax 184.30 =12710*1.45% FUTA tax 8.94 =1490*0.6% SUTA tax 80.46 =1490*5.4% Total employer payroll taxes 903.00
 2 ACCOUNT TITLE DOC NO. POST. REF. DEBIT CREDIT 20-- Sept. 14 Payroll tax expense 903.00 Social Security tax payable 629.30 Medicare tax payable 184.30 FUTA tax payable 8.94 SUTA tax payable 80.46
 Workings: Unemployment taxable earnings: Jordahl, Stephanie 500 =7000-6500 Keesling, Emily 990 =7000-6010 Taxable Social Security: Xia, Xu 1100 =128400-127300

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