Question
Asked Dec 18, 2019
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According to a summary of the payroll of Guthrie Co., $560,000 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.
a. Calculate the employer’s payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.6%.
b. Journalize the entry to record the accrual of payroll taxes.

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Expert Answer

Step 1

Employer payroll taxes: The taxes which the employer must pay to the employees with their salaries is called employer payroll taxes. Such taxes are not withheld from employees’ gross earnings but instead they are paid by employer.

Step 2

a. 

Calculate Employer’s payroll taxes

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Amount ($) Particulars Social security tax (1) Medicare tax (2) State unemployment tax (3) Federal unemployment tax (4) Employer's payroll taxes 33,600 8,400 3,240 360 45,600

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Step 3

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Calculate the amount of social security taxes as below: Social security taxes = $560,000× 6% %3D = $33, 600 (1) ..... Calculate the amount of Medicare taxes as below: Medicare taxes payable = $560,000×1.5% %3D = $8, 400 (2) Calculate the amount of State unemployment taxes as below: State Unemployment taxes payable = $60,000x 5.4% = $3,240 (3) Calculate the amount of Federal unemployment taxes as below: Federal Unemployment taxes = $60,000×0.6% = $360 (4)

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