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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

JOURNAL ENTRIES FOR PAYMENT OF EMPLOYER PAYROLL TAXES Angel Ruiz owns a business called Ruiz Construction Co. He does his banking at Citizens National Bank in Portland, Oregon. The amounts in his general ledger for payroll taxes and the employees’ withholding of Social Security, Medicare, and federal income tax payable as of April 15 of the current year are as follows:

Social Security tax payable (includes both employer and employee) $11,250
Medicare tax payable (includes both employer and employee) 2,625
FUTA tax payable 600
SUTA tax payable 4,050
Employee income tax payable 5,860

Journalize the quarterly payment of the employee federal income taxes and Social Security and Medicare taxes on April 15, 20--, and the payments of the FUTA and SUTA taxes on April 30, 20--.

To determine

Prepare journal entry to record the quarterly payment of the employee federal income taxes, Social Security and Medicare taxes and the payment of FUTA and SUTA taxes.

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.

Prepare journal entry to record the quarterly payment of the employee federal income taxes, Social Security and Medicare taxes.

DateAccount Title and explanationPost. refDebit ($)Credit ($)
April 15Employee Federal income tax payable 5,860 
 FICA-Social Security taxes payable 11,250 
 FICA-Medicare Taxes payable 2,625 
 Cash  19,735
     
 (To record the deposit of employee federal income tax and Social security and Medicare taxes)   

Table (1)

  • Employee federal income tax payable is a liability and it is decreased. Hence, debit employee federal income tax payable by $5,860.
  • FICA tax – social and security tax payable is a liability and there is a decrease in the value of liability. Hence, debit the FICA tax – social and security tax payable by $11,250.
  • FICA tax – medical tax payable is a liability and there is a decrease in the value of liability. Hence, debit the FICA tax – medical tax payable by $2,625...

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