Tom Larry earns a salary of $7,500 per month during the year. FICA taxes are 8%

Question

Tom Larry earns a salary of $7,500 per month during the year. FICA taxes are 8% on the first $100,000 of gross earnings. Federal unemployment insurance taxes are 6.2% of the first $7,000; however, a credit is allowed equal to the state unemployment insurance taxes of 5.4% on the $7,000. During the year, $25,600 was withheld for federal income taxes and $5,700 was withheld for state income taxes. Instructions: a) prepare a journal entry summarizing the payment of Larry's total salary during the year b) prepare a journal entry summarizing the employer payroll tax expense on Larry's salary for the year c) determine the cost of employe Larry for the year

Explanation / Answer

Salary A/c Dr. 90000 State Credit dr. 7000 To Cash 65700 To Fica 25600 To insurance 5700

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