Please help! Will rate!! Total payroll of Walnut Co. was $2,760,000, of which $4
ID: 2596625 • Letter: P
Question
Please help! Will rate!!
Total payroll of Walnut Co. was $2,760,000, of which $480,000 represented amounts
paid in excess of $118,500 to certain employees. The amount paid to employees in
excess of $7,000 was $2,160,000. Income taxes withheld were $675,000. The state
unemployment tax is 1.2%, the federal unemployment tax is .8%, and the F.I.C.A. tax is
7.65% on an employee's salaries and wages to $118,500 and 1.45% in excess of
$118,500.
Instructions
(a) Prepare the journal entry for the salaries and wages paid.
(b) Prepare the entry to record the employer payroll taxes.
Explanation / Answer
No. Account Title Debit Credit (a) Salaries and Wages Expense $2,760,000 Withholding Taxes Payable $675,000 FICA Taxes Payable $181,380* Cash $1,903,620 * [($2,760,000 – $480,000) x7.65%] + ($480,000 x 1.45%) (b) Payroll Tax Expense $193,380 FICA Taxes Payable ($2,280,000 × 7.65%) + ($480,000 × 1.45%) $181,380 FUTA Taxes Payable [($2,760,000 – $2,160,000) × .8%] $4,800 SUTA Taxes Payable ($600,000 × 1.2%) $7,200