For the year ended December 31, 2019, Waterway Electrical Repair Company reports
ID: 2404791 • Letter: F
Question
For the year ended December 31, 2019, Waterway Electrical Repair Company reports the following summary payroll data.
Waterway Company’s payroll taxes are Social Security tax 6.2%, Medicare tax 1.45%, state unemployment 2.5% (due to a stable employment record), and 0.8% federal unemployment. Gross earnings subject to Social Security taxes of 6.2% total $540,000 and gross earnings subject to unemployment taxes total $137,000.
A)Prepare a summary journal entry at December 31 for the full year’s payroll.
B)Journalize the adjusting entry at December 31 to record the employer’s payroll taxes.
Gross earnings: Administrative salaries $169,000 Electricians’ wages 461,000 Total $630,000 Deductions: FICA taxes $38,645 Federal income taxes withheld 165,000 State income taxes withheld (3%) 18,900 United Fund contributions payable 30,288 Health insurance premiums 18,200 Total $275,003Explanation / Answer
*Hope the above explanation helps, please comment if further explanation is required. Your rating is appreciated*
No Account Debit Credit Workings A Salaries and wages expense 6,30,000 FICA taxes payable 38,645 Federal income taxes payable 1,65,000 State income taxes payable 18,900 United fund contributions payable 30,288 Health insurance premiums payable 18,200 Salaries and wages payable 3,58,967 B Payroll tax expense 47,136 Social security tax payable 33480 =540000*6.2% Medicare tax payable 9135 =630000*1.45% State unemployment tax payable 3425 =137000*2.5% Federal unemployment tax payable 1096 =137000*0.8%