Question

On January 14, at the end of the second week of the year, the totals of Castle Company's payroll register showed that its store employees' wages amounted to $29,130 and that its warehouse wages amounted to $11,290. Withholdings consisted of federal income taxes, $4,850, employer's Social Security taxes at the rate of 6.2 percent, and employees' Social Security taxes at a rate of 6.2 percent. Both the employer's and employees' Social Security taxes are based on the first $118,500, and no employee has reached the limit. Additional withholdings were Medicare taxes at the rate of 1.45 percent on all earnings and charitable contributions withheld, $935.

Required:

a. Calculate the amount of Social Security and Medicare taxes to be withheld and prepare the general journal entry to record the payroll. If an amount box does not require an entry, leave it blank. If required, round your intermediate calculations and final answers to the nearest cent and use the rounded answers in subsequent computations.

GENERAL JOURNAL						PAGE
DATE	DESCRIPTION	DOC. NO.		POST. REF.	DEBIT	CREDIT
20--
Jan. 14
	To record payroll for the week ended January 14.

b. Prepare the general journal entry to record the employer's payroll taxes, assuming that the federal unemployment tax is 0.6 percent of the first $7,000, that the state unemployment tax is 5.4 percent of the same base, and that no employee has surpassed the $7,000 limit. If an amount box does not require an entry, leave it blank. If required, round your intermediate calculations and final answers to the nearest cent and use the rounded answers in subsequent computations.

GENERAL JOURNAL						PAGE
DATE	DESCRIPTION	DOC. NO.		POST. REF.	DEBIT	CREDIT
20--
Jan. 14
	To record employer's share of FICA taxes and employer's state and federal unemployment taxes.

Answer 1

a.

GENERAL JOURNAL					PAGE
DATE	DESCRIPTION	DOC. NO.	POST. REF.	DEBIT	CREDIT
20--
Jan. 14	Store Employees' Wages Expense			29130.00
	Warehouse Wages Expense			11290.00
	Employees' Federal Income Tax Payable				4850.00
	FICA Social Security Tax Payable [6.2% x ($29130 + $11290)]				2506.04
	FICA Medicare Tax Payable [1.45% x ($29130 + $11290)]				586.09
	Employees' Charitable Contributions Payable				935.00
	Wages Payable				31542.87
	To record payroll for the week ended January 14.

b.

GENERAL JOURNAL					PAGE
DATE	DESCRIPTION	DOC. NO.	POST. REF.	DEBIT	CREDIT
20--
Jan. 14	Payroll Tax Expense			5517.33
	FICA Social Security Tax Payable				2506.04
	FICA Medicare Tax Payable				586.09
	State Unemployment Tax Payable [5.4% x ($29130 + $11290)]				2182.68
	Federal Unemployment Tax Payable [0.6% x ($29130 + $11290)]				242.52
	To record employer's share of FICA taxes and employer's state and federal unemployment taxes.