Chapter 9, Problem 2SEB

### College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

Chapter
Section

### 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 April 7, 20--, are as follows:Calculate the employer’s payroll taxes expense and prepare the journal entry as of April 7, 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 April 7, 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 employerâ€™s payroll taxes expense.

(Figure 1)

Therefore, the total employer payroll taxes are $500.87. Working Notes: (1) Calculate the amount of total earnings available for Social Security Tax. AmountÂ ofÂ totalÂ earningsÂ availableÂ toÂ SocialÂ SecurityÂ tax}Â =Â (CurrentÂ earningsÂ ofÂ EmployeeÂ B+EmployeeÂ E+EmployeeÂ F+Â EmployeeÂ J+Â EmployeeÂ R)=$850+$970+$830+$1,825+$990=\$5,465

(2) Calculate the amount of total unemployment taxable:

AmountÂ ofÂ totalÂ unemployementÂ taxableÂ =Â (UnemploymentÂ compensationÂ ofÂ EmployeeÂ B+EmployeeÂ E+EmployeeÂ F+<

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