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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Payroll Taxes

Kinsella Inc. has a gross payroll of $13,500 for the pay period. Kinsella must also withhold $1,750 in federal income taxes from the employees and pay state unemployment taxes of $60. Assume the entire payroll is eligible for Social Security and Medicare at standard rates.

Required:

Prepare the necessary journal entries for Kinsella to record both the gross pay earned by employees and the employer portion of these payroll taxes (round to nearest dollar).

To determine

Concept introduction:

Liabilities:

Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period/ years, for example long term loan.

To prepare:

The Journal entry to record the payroll.

Explanation

The Journal entry to record the payroll is explained as follows;

Hernandez Builders
Journal Entries
Account Titles Debit Credit
Salaries Expense $ 13,500
Fede...

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