Question

5. The total wages and salaries earned by all employees of Cutler Manufacturing Company during the month of March, as shown in the labor cost summary and the schedule of fixed administrative and sales salaries, are classified as follows: ********** Direct labor........ *********** Indirect labor................ . Administrative salaries ................. ories... Total wages earned ... ... 625,125 162,120 140,200 172,500 1,099,945 a. Prepare a journal entry to distribute the wages earned during March b. What is the total amount of payroll taxes that will be imposed on the employer for the payroll, assuming that two administrative employees with combined earnings this period of $3,000 have exceeded $8,000 in earnings prior to the period? Present in table all calculations. Table should present FICA 6.2%, Medicare 1.45%, Assume SUTA 4% and FUTA 1% for total payroll. Prepare the payroll taxes journal entry

Answer 1

Requirement a
Date	Journal	Debit	Credit
March	Wages Expenses	$              625,125
	Wages Payable		$              625,125
	(Being wages paid to Direct Labour )
March	Wages Expenses	$              162,120
	Wages Payable		$              162,120
	(Being wages paid to Indirect Labour )
March	Administrative Salaries	$              140,200
	Salaries Payable		$              140,200
	(Being Salary accrued for the month of March)
March	Sales Salaries	$              172,500
	Salaries Payable		$              172,500
	(Being Salary accrued for the month of March)
March	Wages/Salaries Payable	$          1,099,945
	Cash		$          1,099,945
	(Being Wages and Salaries paid to Employees)
Requirement b
						(AMOUNT IN $)
	Total Wages	FICA	SUTA	MEDICARE	FUTA	TOTAL PAYROLL TAXES
	$                                                                                              1,099,945	68,196.59	43,997.80	15,949.20	10,999.45	139,143.04
Date	Journal	Debit	Credit
March	Wages Expenses	$          1,239,088
	Wages Payable		$          1,099,945
	FICA Tax		$                68,197
	Medicare		$                15,949
	SUTA		$                43,998
	FUTA		$                10,999
	(Being wages and taxes accrued for the month of March )