Question

The payroll register for D. Salah Company for the week ended May 18 indicated the following:

Salaries	$555,000
Federal income tax withheld	111,000

The salaries were all subject to the 6.0% social security tax and the 1.5% Medicare tax. In addition, state and federal unemployment taxes were calculated at the rate of 5.4% and 0.8%, respectively, on $10,545 of salaries.

	Required:
	a. Journalize the entry to record the payroll for the week of May 18.*
	b. Journalize the entry to record the payroll tax expense incurred for the week of May 18.* * Refer to the Chart of Accounts for exact wording of account titles. Round your answers to the nearest whole dollar.

CHART OF ACCOUNTS
D. Salah Company
General Ledger
ASSETS 110 Cash 111 Accounts Receivable 112 Interest Receivable 113 Notes Receivable 115 Inventory 116 Supplies 118 Prepaid Insurance 120 Land 123 Building 124 Accumulated Depreciation-Building 125 Office Equipment 126 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 213 Interest Payable 214 Notes Payable 215 Salaries Payable 216 Social Security Tax Payable 217 Medicare Tax Payable 218 Employees Federal Income Tax Payable 219 Employees State Income Tax Payable 221 Retirement Savings Deductions Payable 224 Federal Unemployment Tax Payable 225 State Unemployment Tax Payable 226 Vacation Pay Payable 227 Unfunded Pension Liability 228 Product Warranty Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 313 Income Summary	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Salaries Expense 524 Depreciation Expense-Building 525 Delivery Expense 526 Repairs Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense-Office Equipment 533 Insurance Expense 534 Supplies Expense 535 Payroll Tax Expense 536 Vacation Pay Expense 537 Pension Expense 538 Cash Short and Over 539 Product Warranty Expense 540 Miscellaneous Expense 710 Interest Expense

Answer 1

a. Entry to record the payroll for the week
General Journal	Debit	Credit
Salaries Expense	$555,000
Social Security Tax payable                    [$555,000 x 6%]		$33,300
Medicare Tax payable                              [$555,000 x 1.5%]		$8,325
Employees Federal Income tax payable		$111,000
Salaries Payable                                       [Gross salaries - Deductions = $555,000 - $33,300 - $8,325 - $111,000]		$402,375
(To record the payroll expense)

.

.

b. Entry to record the payroll tax expense
General Journal	Debit	Credit
Payroll tax Expense           [Total = $33,300 + $8,325 + $569 + $84]	$42,278
Social Security Tax payable                    [$555,000 x 6%]		$33,300
Medicare Tax payable                              [$555,000 x 1.5%]		$8,325
State Unemployment Tax Payable                    [$10,545 x 5.40%]		$569
Federal Unemployment Tax Payable               [$10,545 x 0.80%]		$84
(To record the payroll tax expense)