Question

2. (20 Points) Santa Barbara Express has 4 sales employees, each of whom earns $5,000 per month and is paid on the last working day of the month. Each employee's wages are subject to FICA social security taxes of 62% and Medicare taxes of I .45% on all wages. Withholding for each employee also includes federal income tax of 16% and monthly medical insurance premiums of $110 for each employee. a Prepare the general journal entry to accrue the monthly sales salaries expense at January 31. DATE DEBIT CREDIT b. The employer payroll taxes for Santa Barbara Express include FICA taxes, federal unemployment taxes of 0.6% of the first $7,000 paid each employee, and state unemployment taxes of4.0% of the first employer's payroll taxes at January 31 for Santa Barbara Express. (Assume that none of the employees has reached the unemployment limit of $7,000.) DATE $7,000 paid to each employee. Prepare the journal entry to record the DEBIT CREDIT

Answer 1

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Naming convention is not available, can be slightly different: Solution: ournal Entries Date Account title and explaination Debit Credit Jan.31 Sales Salaries Expense (5000*4) $ 20,000 Social Security Taxes Payable (20000*6.2%) Medicare Taxes Payable Federal income tax Payable (20000*16%) Medical insurance payable (110*4) Sales Salaries Payable To record the accrual of sales salaries expense) $1,240 290 $ 3,200 440 $ 14,830 (20000*1.45%) (plug Date Account title and explaination Debit Credit Jan.31 Payroll Tax Expense (plug) $ 2,450 Social Security Taxes Payable (20000*6.2%) Medicare Taxes Payable Federal Unemployment tax Payable (FUTA) (20000*0.6%) State Unemployment tax Payable (FUTA) (20000*4%) To record the employer $1,240 290 120 800 (20000*1.45%) payroll tax expense)