27th Edition
WARREN + 5 others
ISBN: 9781337272094




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

Journalize payroll tax

The payroll register of Longboat Co. indicates $5,400 of social security withheld and $1,350 of Medicare tax withheld on total salaries of $90,000 for the period. Earnings of $10,000 are subject to state and federal unemployment compensation taxes at the federal rate of 0.6% and the state rate of 5.4%.

Provide the journal entry to record the payroll tax expense for the period.

To determine

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

To Journalize: The payroll taxes expense for the period.


Working notes:

Calculate the amount of Federal unemployment taxes payable as below:

Federal Unemployment taxes payable=$10,000×0.6%=$60 (1)

Calculate the amount of State unemployment taxes payable as below:

State Unemployment taxes payable=$10,000×5.4%=$540 (2)

Calculate the amount of payroll tax expense as below:

Payroll tax expense=(Social security Taxes Payable )+ (Medicare Taxes Payable) +(Federal Unemployment Taxes Payable) + (State Unemployment </

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