According to a summary of the payroll of Mountain Streaming Co., $720,000 was su
ID: 2583741 • Letter: A
Question
According to a summary of the payroll of Mountain Streaming Co., $720,000 was subject to the 6.0% social security tax and the 1.5% Medicare tax. Also, $60,000 was subject to state and federal unemployment taxes.
Chart of Accounts
Starting Question
a. Calculate the employer’s payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.8%.
Journal
b. On December 31, journalize the entry to record the accrual of payroll taxes. Refer to the Chart of Accounts for exact wording of account titles.
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JOURNAL
ACCOUNTING EQUATION
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Required: A. Calculate the employer’s payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.8%. B. Journalize the entry to record the accrual of payroll taxes. Refer to the Chart of Accounts for exact wording of account titles.Explanation / Answer
a Social Security Tax Payable 43200 =720000*6% Medicare Tax Payable 10800 =720000*1.5% Federal Unemployment Tax Payable 3240 =60000*5.4% State Unemployment Tax Payable 480 =60000*0.8% Total Employer’s payroll taxes 57720 DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY Dec-31 Payroll Tax Expense 57720 -57720 Social Security Tax Payable 43200 43200 Medicare Tax Payable 10800 10800 Federal Unemployment Tax Payable 3240 3240 State Unemployment Tax Payable 480 480