Question

Lopez Company has a single employee, who earns a salary of $2,500 per pay period (or $60,000 per year). The employee’s paycheck, dated January 15 of the current year, included withholdings of $400 for employee income taxes, $191.25 for FICA—Social Security Taxes, and $150.00 for FICA—Medicare Taxes. FUTA specifies a federal tax rate of 6.0% on taxable wages up to the first $7,000 for each employee. Complete the necessary journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• Record the compensation expense for FICA taxes and FUTA taxes. (journal entry)

Answer 1

SOLUTION:

Salaries Expense (60,000 ÷ 24 periods)	2,500
FICA — Social Security Taxes Payable		191.25
FICA — Medicare Taxes Payable		150
Employee Federal Income Taxes Payable		400
Salaries Payable		1,758.75
Salaries Payable	1,758.75
Cash		1,758.75