Taxable Earnings Unemployment Compensation $200 Current Social Employee Name Earnings $ 700 Security $ 700 Aus, Glenn E. Diaz, Charles K. 350 350 350 Knapp, Carol S. Mueller, Deborah F. Yeager, Jackie R. 1,200 1,200 830 125 830 920 35 920

Taxable Earnings Unemployment Compensation $200 Current Social Employee Name Earnings $ 700 Security $ 700 Aus, Glenn E. Diaz, Charles K. 350 350 350 Knapp, Carol S. Mueller, Deborah F. Yeager, Jackie R. 1,200 1,200 830 125 830 920 35 920

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter24: Multistate Corporate Taxation

Section: Chapter Questions

Problem 26P

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Concept explainers

Payroll Entries

Payroll is a comprehensive record of employees that are paid by the company. Payroll classifies employees into various categories according to their function and pays scale (basic wage, allowance, income tax, other taxes, employee loans, etc.). Payroll processes form the bedrock of every organization as it contains sensitive information on the ‘wage and paycheck’ portion of the company’s strength—its employees. The organization needs to keep a track of the employees currently on the payroll, the net payout for the company, the record of transactions related to the employees including deductions and payroll taxes to identify the liability and its effect on the balance sheet (and other financial statements). Payroll records also include qualitative factors such as the conduct of the employee.

Question

CALCULATION AND JOURNAL ENTRY FOR EMPLOYER PAYROLL TAXES Earnings for several employees for the week ended March 12, 20--, are as follows:

Calculate the employer’s payroll taxes expense and prepare the journal entry as of March 12, 20--, assuming that FUTA tax is 0.6%, SUTA tax is 5.4%, Social Security tax is 6.2%, and Medicare tax is 1.45%.

Taxable Earnings
Unemployment
Compensation
$200
Current
Social
Employee Name
Earnings
$ 700
Security
$ 700
Aus, Glenn E.
Diaz, Charles K.
350
350
350
Knapp, Carol S.
Mueller, Deborah F.
Yeager, Jackie R.
1,200
1,200
830
125
830
920
35
920

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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