Question

Lee Financial Services pays employees monthly, Payroll Information is listed below for January 2018, the first month of Lee's fiscal year Assume that none of the employees exceeded any relevant wage base. Salses Federal income taxes to be withheld Federal unemployment tax rate State U ployant tax rate after HUTA deduction) social security tax rate Medicare tax rate 5.23 Required: Calculate the income and payroll taxes for the January 2018 pay period. Prepare the appropriate journal entries to record salaries and wages expense not paid and payroll tax expense for the January 2018 pay period

Answer 1

Ans:

Computation of Income and Payroll Tax for the January 2018 Pay Period
Tax	Amount withheld from employees gross pay	Amount paid by employer
Federal income taxes to be withheld	$122,000.0	$0.0
Social Security (6.2%)	$37820	$37820
Medicare taxes payable ($610,000 x 1.45 %)	$8,845	$8,845
Federal unemployment tax	$0.0	$3,660
State unemployment tax	$0.0	$32940
Total	$168,665	$83265

Journal Entry
S. No.	Account titles and explanation	Debit	Credit
1	Salaries and wages expense (total amount earned)	$610,000
	Withholding taxes payable (federal income tax)		$122,000
	Social security taxes payable ($610,000 x 6.2%)		$37820
	Medicare taxes payable ($610,000 x 1.45 %)		8845
	Salaries and wages payable (net pay)		$441,335

S. No.	Account titles and explanation	Debit	Credit
2	Payroll tax expense (total)	$83265
	Social security taxes payable (employer’s matching amount)		$37820
	Medicare taxes payable ($610,000 x 1.45 %)		8845
	Federal unemployment tax payable ($610,000 x 0.6%)		$3,660
	State unemployment tax payable ($610,000 x 5.4%)		$32940