BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

Solutions

Chapter
Section
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
18 views

Payroll and Payroll Taxes Bailey Dry Cleaners has six employees who were paid the following wages during 2019:

Chapter 9, Problem 9P, Payroll and Payroll Taxes Bailey Dry Cleaners has six employees who were paid the following wages

The state allows the company a 1% unemployment compensation merit-rating reduction from the normal rate of 5.4%. The federal unemployment rate is 0.6%. The maximum unemployment wages per employee are $7,000 for both the state and the federal government. Income tax withholdings of 20% are applied to all employees. A FICA tax rate of 8% on the employee and 8% on the employer is applied to the first $128,400 of each employee’s wages.

Required:

  1. 1. Calculate the amount of payroll taxes to be paid by Bailey.
  2. 2. Prepare the journal entries to record the payment of payroll and the payroll tax expense.

1.

To determine

Compute the amount of tax that must be paid to the Cleaners B.

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.

Compute the amount of tax that must be paid to the Cleaners B.

Employee Name FICA wages in $Unemployment  tax wage sin $
Employee FJ27,000 7,000
Employee BL18,0007,000
Employee DM124,8007,000
Employee LS28,0007,000
Employee CS26,0007,000
Employee ML20,0007,000
    Total243,80042,000

(Table 1)

Working Note:

(1) Calculate the state the state unemployment tax:

State unemployment tax = (Percentage of  State unemployment tax)(Percentage of unemployment compensation)=5

2.

To determine

Prepare journal entry to record the given transaction.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Explain how absolute advantage and comparative advantage differ.

Brief Principles of Macroeconomics (MindTap Course List)

For a stock to be in equilibrium, what two conditions must hold?

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

Why is EBIT generally considered independent of financial leverage? Why might EBIT actually be affected by fina...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)