For the year ended December 31, 2020, Waterway Electrical Repair Company reports the following summary payroll data. Gross earnings: Administrative salaries $180,000 Electricians’ wages 382,000 Total $562,000 Deductions: FICA taxes $37,847 Federal income taxes withheld 160,000 State income taxes withheld (3%) 16,860 United Fund contributions payable 28,100 Health insurance premiums 15,000 Total $257,807 Waterway’s payroll taxes are Social Security tax 6.2%, Medicare tax 1.45%, state unemployment 2.5% (due to a stable employment record), and 0.8% federal unemployment. Gross earnings subject to Social Security taxes of 6.2% total $479,000, and gross earnings subject to unemployment taxes total $111,000. No employee exceeds the $127,200 limit related to FICA taxes. (a) Prepare a summary journal entry at December 31 for the full year’s payroll. (b) Journalize the adjusting entry at December 31 to record the employer’s payroll taxes.
For the year ended December 31, 2020, Waterway Electrical Repair Company reports the following summary payroll data.
Gross earnings:
Administrative salaries
$180,000
Electricians’ wages
382,000
Total
$562,000
Deductions:
FICA taxes
$37,847
Federal income taxes withheld
160,000
State income taxes withheld (3%)
16,860
United Fund contributions payable
28,100
Health insurance premiums
15,000
Total
$257,807
Waterway’s payroll taxes are Social Security tax 6.2%, Medicare tax 1.45%, state
(a)
Prepare a summary
(b)
Journalize the
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