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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 Earnings for several employees for the week ended March 12, 20--, are as follows:

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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%.

To determine

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%.

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 $348.60

Working Notes:

(1) Calculate the amount of total earnings available for Social Security Tax.

Amount of total earnings available to Social Security tax} = (Current earnings of Employee A+Employee D+Employee K+ Employee M+ Employee Y)=$700+$350+$1,200+$830+$920=$4,000.

(2) Calculate the amount of total unemployment taxable:

Amount of total unemployement taxable = (Unemployment compensation of Employee A+Employee D+Employee K

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