Tony Company has a January 15 mid-month gross salaries expense of $25,000. All i

Question

Tony Company has a January 15 mid-month gross salaries expense of $25,000. All is subject to FICA Social Security (6.2%). PICA Medicare (1.45%), state income tax (5%) and federal income tax (15%) withholdings. Additionally, all is subject to employer taxet to include FUTA (0.8%) and SUTA (5.4%) taxes. (Round all calculations to the nearest penny.) Prepare the general journal entry to record the employer's payroll liability. Prepare the general journal entry to record the employer's payroll tax liability. Prepare the general journal entry to liquidate the liabilities accrued in parts (a) and (b) on January 22.

Explanation / Answer

a)

Salary Expenses = 25000

Federal Income tax withholding = 15%*25000 = 3750

State Income tax withholding = 5%*25000 = 1250

FICA Social Security tax payable = 6.2%*25000 = 1550

FICA Medicare tax payable = 1.45%*25000 = 362.50

Journal Entry

b)

Payroll Tax Expenses

FICA Social Security tax payable = 6.2%*25000 = 1550

FICA Medicare tax payable = 1.45%*25000 = 362.50

FUTA Payable = 0.8%*25000 = 200

SUTA payable = 5.4%*25000 = 1350

Journal Entry

c)

Journal Entry

Account Title & Explaination Debit Credit Salary Expenses 25000 Federal Income tax withholding      3,750.00 State Income tax withholding      1,250.00 FICA Social Security tax payable      1,550.00 FICA Medicare tax payable          362.50 Salary Payable    18,087.50

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