During January, Luxury Cruise Lines incurs employee salaries of $1.2 million. Wi
ID: 2406379 • Letter: D
Question
During January, Luxury Cruise Lines incurs employee salaries of $1.2 million. Withholdings in January are $91,800 for the employee portion of FICA, $180,000 for federal income tax, $75,000 for state income tax, and $12,000 for the employee portion of health insurance (payable to Blue Cross/Blue Shield). The company incurs an additional $74,400 for federal and state unemployment tax and $36,000 for the employer portion of health insurance. Required: 1., 2.& 3. Record the necessary entries in the Journal Entry Worksheet below. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)
Explanation / Answer
1.
Debit.... Salaries Expense..... $1,200,000
Credit.... FICA Payable.... $91,800
Credit..... Federal Income Tax Withholding Payable... $180,000
Credit .... State Income Tax Withholding Payable..... $75,000
Credit ....Health Insurance Payable ....$12,000
Credit... Salaries Payable ....$841,200
2.
Debit... Payroll Tax Expense..... $276,600
Credit ... FICA Payable.... $202,200
Credit... Unemployment Taxes Payable.... $74,400
3.
Debit... Salaries Payable (fringe benefit)... $36,000
Credit... Health Insurance Payable.... $36,000
NOTE : The third entry of health insurance payable can be combined with second entry.. I. E., health insurance can be paid out of payroll tax also.