Question

England, Inc., had the following payroll for March:

Officers’ salaries	$39,000
Sales salaries	60,000
Federal income taxes withheld	21,000
FICA taxes withheld	7,900
Health insurance premiums withheld	2,500
Salaries (included above) subject to federal unemployment taxes	55,000
Salaries (included above) subject to state unemployment taxes	65,000

Required
Prepare journal entries on March 31 to record:
a. Accrual of the monthly payroll.
b. Payment of the net payroll.
c. Accrual of employer’s payroll taxes. (Assume that the FICA tax matches the amount withheld, the federal unemployment tax is 0.6 percent, and the state unemployment tax is 5.4 percent.)
d. Payment of all liabilities related to this payroll. (Assume that all are settled at the same time.)

• Part A
• Part B
• Part C
• Part D

General Journal
Date	Description	Debit	Credit
Mar.31	AnswerFederal Income Tax Withholding PayableFICA Tax PayableHealth Insurance Premiums PayableFederal Unemployment Tax PayableState Unemployment Tax PayableCashOfficers' Salaries ExpenseSales Salaries ExpensePayroll PayablePayroll Tax       Expense	Answer	Answer
	Sales Salaries Expense	Answer	Answer
	AnswerFederal Income Tax Withholding PayableFICA Tax PayableHealth Insurance Premiums PayableFederal Unemployment Tax PayableState Unemployment Tax PayableCashOfficers' Salaries ExpenseSales Salaries ExpensePayroll PayablePayroll Tax       Expense	Answer	Answer
	FICA Tax Payable	Answer	Answer
	Health Insurance Premiums Payable	Answer	Answer
	Payroll Payable	Answer	Answer
	To record March payroll.

Answer 1

General Journal
No.	Date	Description	Debit	Credit
a.	Mar. 31	Officers' Salaries Expense	$39,000
		Sales Salaries Expense	$60,000
		Federal Income Tax Withholding payable		$21,000
		FICA taxes payable		$7,900
		Health insurance premium payable		$2,500
		Payroll payable            [Total salaries - Total deductions = ($39,000 + $60,000) - ($21,000 + $7,900 + $2,500)]		$67,600
		(To record March payroll)
No.	Date	Description	Debit	Credit
b.	Mar. 31	Payroll Payable	$67,600
		Cash		$67,600
		(To pay net payroll for March)
No.	Date	Description	Debit	Credit
c.	Mar. 31	Payroll taxes expense                                  [$7,9,00 + $330 + $3,510]	$11,740
		FICA taxes payable		$7,900
		Federal unemployment Tax payable       [$55,000 x 0.60%]		$330
		State unemployment Tax payable            [$65,000 x 5.40%]		$3,510
		(To record employer's March payroll taxes)
No.	Date	Description	Debit	Credit
d.	Mar. 31	Federal Income Tax Withholding payable	$21,000
		FICA taxes payable          [Employer's portion + Employee's portion = $7,900 + $7,900]	$15,800
		Health insurance premium payable	$2,500
		Federal unemployment Tax payable	$330
		State unemployment Tax payable	$3,510
		Cash                              [Total amount paid = $21,000 + $15,800 + $2,500 + $330 + $3,510]		$43,140
		(To pay liabilities related to March payroll)