Instructions Urban Window Company had gross wages of $200,000 during the week en
ID: 341216 • Letter: I
Question
Instructions Urban Window Company had gross wages of $200,000 during the week ended July 15. The amount of wages subject to social security tax was $200,000, while the amount of wages subject to federal and state unemployment taxes was $30,000. Tax rates are as follows: Social security Medicare State unemployment Federal unemployment 6.0% 1.5% 5.4% 0.6% The total amount withheld from employee wages for federal taxes was $40,500 Required: A. Journalize the entry to record the payroll for the week of July 15. B. Journalize the entry to record the payroll tax expense incurred for the week of July 15. Refer to the Chart of Accounts for exact wording of account titles.Explanation / Answer
Accounts Titles & Explanation
Debit
Credit
(1).
Wages expense
$200000
Social security tax payable ($200000 * 6%)
$12000
Medicare tax payable ($200000 * 1.5%)
$3000
Employees federal income tax payable
$40500
Wages payable
$144500
(For recording payroll expenses)
(2).
Payroll tax expense
$16800
Social security tax payable ($200000 * 6%)
$12000
Medicare tax payable ($200000 * 1.5%)
$3000
State unemployement tax payable ($30000 * 5.4%)
$1620
Federal unemployment tax payable ($30000 * 0.6%)
$180
(For recording payroll tax expenses)
Accounts Titles & Explanation
Debit
Credit
(1).
Wages expense
$200000
Social security tax payable ($200000 * 6%)
$12000
Medicare tax payable ($200000 * 1.5%)
$3000
Employees federal income tax payable
$40500
Wages payable
$144500
(For recording payroll expenses)
(2).
Payroll tax expense
$16800
Social security tax payable ($200000 * 6%)
$12000
Medicare tax payable ($200000 * 1.5%)
$3000
State unemployement tax payable ($30000 * 5.4%)
$1620
Federal unemployment tax payable ($30000 * 0.6%)
$180
(For recording payroll tax expenses)