College Accounting, Chapters 1-27
Solutions
College Accounting, Chapters 1-27
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) | $11,250 |
| Medicare tax payable (includes both employer and employee) | 2,625 |
| FUTA tax payable | 600 |
| SUTA tax payable | 4,050 |
| Employee income tax payable | 5,860 |
Journalize the quarterly payment of the employee federal income taxes and Social Security and Medicare taxes on April 15, 20--, and the payments of the FUTA and SUTA taxes on April 30, 20--.
Prepare journal entry to record the quarterly payment of the employee federal income taxes, Social Security and Medicare taxes and the payment of FUTA and SUTA taxes.
Payroll tax:
Payroll tax refers to the tax that are equally contributed by employees and employer based on the salary and wages of an employee. Payroll tax includes taxes like federal tax, local income tax, state tax, social security tax and federal and state unemployment tax.
Prepare journal entry to record the quarterly payment of the employee federal income taxes, Social Security and Medicare taxes.
| Date | Account Title and explanation | Post. ref | Debit ($) | Credit ($) |
| April 15 | Employee Federal income tax payable | Â | 5,860 | Â |
| Â | FICA-Social Security taxes payable | Â | 11,250 | Â |
| Â | FICA-Medicare Taxes payable | Â | 2,625 | Â |
| Â | Cash | Â | Â | 19,735 |
| Â | Â | Â | Â | Â |
| Â | (To record the deposit of employee federal income tax and Social security and Medicare taxes) | Â | Â | Â |
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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