Question

Payroll Tax Entries

According to a summary of the payroll of Guthrie Co., $496,000 was subject to the 6.0% social security tax and $610,000 was subject to the 1.5% Medicare tax. Also, $16,000 was subject to state and federal unemployment taxes.

a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 4.2%; federal unemployment, 0.6%.
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b. Journalize the entry to record the accrual of payroll taxes. If an amount box does not require an entry, leave it blank.

Answer 1

(a.)Calculate the employer's payroll taxes, using the following rates: state unemployment, 4.2%; federal unemployment, 0.6%.

Social security tax ($4,96,000 x 6%) $29,760

Medicare tax ($6,10,000 x 1.5%)                         $9,150

State unemployment ($16,000 x 4.2%)                $672

Federal unemployment ($16,000 x 0.6%)            $96

TOTAL $39,678

(b) Journalize the entry to record the accrual of payroll taxes.

Dr     Payroll Tax Expense                         $69,678

Cr Social Security Tax Payable                                 $29,760

Cr Medicare Tax Payable                                          $9,150

Cr State Unemployment Tax Payable                       $672

Cr Federal Unemployment Tax Payable $96