Question

Emily Turnbull, president of Aerobic Equipment Corporation, is concerned about her employees' well-being. The company offers its employees free medical, dental, and life insurance coverage. It also matches employee contributions to a voluntary retirement plan up to 5% of their salaries. Assume that no employee's cumulative wages exceed the relevant wage bases. Payroll information for the biweekly payroll period ending January 24 is listed below. Wages and salaries Employee contribution to voluntary retirement plan Medical insurance premiums paid by employer Dental insurance premiums paid by employer Life insurance premiums paid by employer Federal and state income tax withheld FICA tax rate Federal and state unemployment tax rate $1,900,000 95,000 38,000 13,300 6,650 408,500 7.65% 6.29% Required: 1., 2. & 3. Record the necessary journal entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet < 1 Record the employee salary expense, withholdings, and salaries payable.

Answer 1

Required journal is as below:

Date	Account titles and explanations	Ref.	Debit	Credit
Jan.24	Wages and salaries expenses		$1,900,000
	Contribution to V.R. plan			$95,000
	Income tax withholding (Fed and State)			$408,500
	FICA tax withholding			$145,350
	Wages and salaries payable			$1,251,150
	To record employee salary after all withholdings that is outstanding.

Notes:

No.1) Employer’s contribution in respect of medical, dental, and life insurance should not be considered, since these don’t reduce employee’s pay.

No.2) FICA = 1,900,000 × 7.65% = 145,350

No.3) Unemployment taxes are not parts of employee’s