27th Edition
WARREN + 5 others
ISBN: 9781337272094




27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Payroll tax entries

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, 560,000 was subject to state and federal unemployment taxes.

  1. a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.6%.
  2. b. Journalize the entry to record the accrual of payroll taxes.


To determine

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.

To calculate: Employer’s payroll taxes.


Working notes:

Calculate the amount of social security taxes as below:

Social security taxes=$560,000×6%=$33,600 (1)

Calculate the amount of Medicare taxes as below:

Medicare taxes payable=$560,000×1


To determine

To Journalize: The accrual of employer payroll taxes.

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