Question

Urban Window Company had gross wages of $320,000 during the week ended July 15. The amount of wages subject to social security tax was $320,000, while the amount of wages subject to federal and state unemployment taxes was $40,000. Tax rates are as follows:

Social security 6.0%

Medicare 1.5%

State unemployment 5.4%

Federal unemployment 0.6%

The total amount withheld from employee wages for federal taxes was $75,200.

Required:

A. Journalize the entry to record the payroll for the week of July 15.*

B. Journalize the entry to record the payroll tax expense incurred for the week of July 15.*

*Refer to the Chart of Accounts for exact wording of account titles.

A. Journalize the entry to record the payroll for the week of July 15.*

B. Journalize the entry to record the payroll tax expense incurred for the week of July 15.*

*Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Date	Description	Post Ref.	Debit	Credit	Assets	Liabilities	Equity
July 15	Wages expense		320000				↓
	Social Security tax payable			19200		↑		=320000*6%
	Medicare tax payable			4800		↑		=320000*1.5%
	Employees federal Income tax payable			75200		↑
	Wages payable			220800		↑
July 15	Payroll tax expense		26400
	Social Security tax payable			19200			↓
	Medicare tax payable			4800		↑
	Federal Unemployment tax payable			240		↑		=40000*0.6%
	State Unemployment tax payable			2160		↑		=40000*5.4%