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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

CALCULATION AND JOURNAL ENTRY FOR EMPLOYER PAYROLL TAXES Portions of the payroll register for Kathy’s Cupcakes for the week ended June 21 are shown below. The SUTA tax rate is 5.4%, and the FUTA tax rate is 0.6%, both on the first $7,000 of earnings. The Social Security tax rate is 6.2% on the first $128,400 of earnings. The Medicare rate is 1.45% on gross earnings.

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Calculate the employer’s payroll taxes expense and prepare the journal entry to record the employer’s payroll taxes expense for the week ended June 21 of the current year.

To determine

Calculate the employer’s payroll taxes expense and prepare the journal entry to record the employer’s payroll taxes expense for the week ended June 21 of the current year.

Explanation

Payroll tax:

Payroll tax refers to the tax that are equally contributed by employees and employer based on the salary and wages of an employee. Payroll tax includes taxes like federal tax, local income tax, state tax, social security tax and federal and state unemployment tax.

Calculate the employer’s payroll taxes expense.

(Figure 1)

Therefore, the total employer payroll taxes are $1,938.12.

Prepare the journal entry to record the employer’s payroll taxes expense for the week ended June 21 of the current year.

DateAccount Title and explanationPost. refDebit ($)Credit ($)
June 21Payroll tax expense 1,938.12 
 FICA-Social Security taxes payable  972.16
 FICA-Medicare Taxes payable  227...

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