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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 Francis Baker owns a business called Baker Construction Co. She does her banking at the American National Bank in Seattle, Washington. The amounts in her general ledger for payroll taxes and employees’ withholding of Social Security, Medicare, and federal income tax payable as of July 15 of the current year are as follows:

Social Security tax payable (includes both employer and employee) $9,563
Medicare tax payable (includes both employer and employee) 2,250
FUTA tax payable 504
SUTA tax payable 3,402
Employee federal income tax payable 5,260

Journalize the quarterly payment of the employee federal income taxes and Social Security and Medicare taxes on July 15, 20--, and the payments of the FUTA and SUTA taxes on July 31, 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 ($)Credit ($)
July 15Employee Federal income tax payable 5,260 
 FICA-Social Security taxes payable 9,563 
 FICA-Medicare Taxes payable 2,250 
 Cash  17,073
     
 (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 $5,260.
  • 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 $9,563.
  • 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 $2,250...

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