Question

Please answer the whole question.

Francisco Company has 10 employees, each of whom earns $2,900 per month and is paid on the last day of each month. All 10 have been employed continuously at this amount since January 1. On March 1, the following accounts and balances exist in its general ledger:

1. FICA—Social Security Taxes Payable, $3,596; FICA—Medicare Taxes Payable, $842. (The balances of these accounts represent total liabilities for both the employer's and employees' FICA taxes for the February payroll only.)

2. Employees' Federal Income Taxes Payable, $7,250 (liability for February only).

3. Federal Unemployment Taxes Payable, $348 (liability for January and February together).

4. State Unemployment Taxes Payable, $2,320 (liability for January and February together).

During March and April, the company had the following payroll transactions.

Mar.		15		Issued check payable to Swift Bank, a federal depository bank authorized to accept employers' payments of FICA taxes and employee income tax withholdings. The $11,688 check is in payment of the February FICA and employee income taxes.
		31		Recorded the journal entry for the March salaries payable. Then recorded the cash payment of the March payroll (the company issued checks payable to each employee in payment of the March payroll). The payroll register shows the following summary totals for the March pay period.

Salaries
Office Salaries			Shop Salaries		Gross Pay		FICA Taxes*		Federal Income Taxes		Net Pay
	$	11,600	$	17,400	$	29,000	$	1,798	$	7,250	$	19,531
							$	421

* FICA taxes are Social Security and Medicare, respectively.

		31		Recorded the employer's payroll taxes resulting from the March payroll. The company has a merit rating that reduces its state unemployment tax rate to 4.00% of the first $7,000 paid each employee. The federal rate is 0.60%.
Apr.		15		Issued check to Swift Bank in payment of the March FICA and employee income taxes.
		15		Issued check to the State Tax Commission for the January, February, and March state unemployment taxes. Filed the check and the first-quarter tax return with the Commission.
		30		Issued check payable to Swift Bank in payment of the employer's FUTA taxes for the first quarter of the year.
		30		Filed Form 941 with the IRS, reporting the FICA taxes and the employees' federal income tax withholdings for the first quarter.

Required:
Prepare journal entries to record the transactions and events for both March and April. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Answer 1

Solution :-

Date	General journal	Debit	Credit
March 15	FICA social; security taxes payable	$3,596
	FICA medicare taxes payable	$842
	Employee fed . income taxes payable	$7,250
	Cash [ $3,596 + $842 + $7,250 ]		$11,688
March 31	Office salaries expense	$11,600
	Shop wages expense	$17,400
	FICA social security taxes payable		$1,798
	FICA medicare taxes payable		$421
	Employee fed . income taxes payable		$7,250
	Salaries payable		$19,531
March 31	Cash payroll bank account	$19,531
	Cash		$19,531
March 31	Payroll taxes expense [ $1,798 + $421 + $480 + $96 ]	$2,795
	FICA social security taxes payable		$1,798
	FICA medicare taxes payable		$421
	State unemployment taxes payable		$480
	Federal unemployment taxes payable		$96
April 15	FICA social security taxes payable	$3,596
	FICA medicare taxes payable	$842
	Employee fed . income taxes payable	$7,250
	Cash [ $3,596 + $842 + $7,250 ]		$11,688
April 15	State unemployment taxes payable	$2,800
	Cash [ $2,320 + $480 ]		$2,800
April 30	Federal unemployment taxes payable	$480
	Cash		$480
April 30	No entry

Working note :-

Particulars	Amount
MARCH 15 :
Amount earned	= $2,900 * 2 = $5,800
subject to SUTA / FUTA in march	= 7,000 - 5,800 = $1,200
State unemployment taxes payable	= $1,200 * 10 employees * 4.0% = $480
Federal unemployment taxes payable	=$1,200 * 10 employees * 0.8% = $96