Question

The payroll of Marigold Company for September 2019 is as follows.

Total payroll was $502,000, of which $102,000 is exempt from Social Security tax because it represented amounts paid in excess of $128,400 to certain employees. The amount paid to employees in excess of $7,000 was $366,000. Income taxes in the amount of $77,900 were withheld, as was $9,300 in union dues. The state unemployment tax is 3.5%, but Marigold Company is allowed a credit of 2.3% by the state for its unemployment experience. Also, assume that the current FICA tax is 7.65% on an employee’s wages to $128,400 and 1.45% in excess of $128,400. No employee for Marigold makes more than $135,000. The federal unemployment tax rate is 0.8% after state credit.

Prepare the necessary journal entries if the wages and salaries paid and the employer payroll taxes are recorded separately. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts .Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation Debit Credit

(To record wages and salaries paid)

(To record employer payroll taxes)

Answer 1

ANSWER

  journal entries :-

Date	Accounts title	Debit	Credit
1	Wages and salaries expense	$502,000
	To withholding taxes payable		$77,900
	To F.I.C.A. tax payable [Note 1]		$32,079
	To Union dues payable		$9,300
	To cash		$382,721
	Note 1:   F.I.C.A. tax payable = [$502,000- $102,000 ]* 7.65% + [$102,000 * 1.45%] =[$400,000* 7.65% + [$102,000 * 1.45%] =30,600+ 1,479 = 32,079
2.	Payroll tax expense	$34,799
	To F.I.C.A. tax payable		$32,079
	To federal unemployment tax [(502,000- 366,000) * 0.8%]		$1,088
	To state unemployment tax [(502,000- 366,000) * (3.5% -2.3%)]		$1,632

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