Question

Entries for payroll and payroll taxes The following information about the payroll for the week ended December 30 was obtained from the records of Saine Co.: Salaries: Deductions: Income tax withheld Sales salaries $625,000 Warehouse salaries U.S. savings bonds 240,000 320,000 $232,260 35,500 53,325 Office salaries Group insurance $1,185,000 Tax rates assumed: Social security, 6% Medicare, 1.5% State unemployment (employer only), 5.4% Federal unemployment (employer only), 0.8%

Answer 1

Answer -

1a. Answer -

Date	Account	Debit	Credit
Dec. 30	Sales salaries expense	$625000
	Warehouse salaries expense	$240000
	Office salaries expense	$320000
	Employees federal income tax payable		$232260
	Social security tax payable		$71100
	Medicare tax payable		$17775
	Bonds deductions payable		$35500
	Group insurance payable		$53325
	Salaries payable		$775040

Calculation:

1. Social security tax:

= [Sales salaries + Warehouse salaries + Office salaries] * 6%

= [$625000 + $240000 + $320000] * 6%

= $1185000 * 6%

= $71100

2. Medicare tax:

= [Sales salaries + Warehouse salaries + Office salaries] * 1.5%

= [$625000 + $240000 + $320000] * 1.5%

= $1185000 * 1.5%

= $17775

3. Salaries payable:

= [Sales salaries + Warehouse salaries + Office salaries] - [Employees income tax + Social security tax + Medicare tax + Bonds deductions + Group insurance]

= [$625000 + $240000 + $320000] - [$232260 + $71100 + $17775 + $35500 + $53325]

= $775040

1b. Answer -

Date	Account	Debit	Credit
Dec. 30	Payroll tax expense	$90735
	Social security tax payable		$71100
	Medicare tax payable		$17775
	State unemployment tax payable		$1620
	Federal unemployment tax payable		$240

Calculation:

As per given information, $30000 is subject to unemployment compensation taxes.

So,

1. State unemployment tax:

= $30000 * 5.4%

= $1620

2. Federal unemployment tax:

= $30000 * 0.8%

= $240

3. Payroll tax expense:

= Social security tax + Medicare tax + State unemployment tax + Federal unemployment tax

= $71100 + $17775 + $1620 + $240

= $90735

2a. Answer -

Date	Account	Debit	Credit
Dec. 30	Sales salaries expense	$625000
	Warehouse salaries expense	$240000
	Office salaries expense	$320000
	Employees federal income tax payable		$232260
	Social security tax payable		$71100
	Medicare tax payable		$17775
	Bonds deductions payable		$35500
	Group insurance payable		$53325
	Salaries payable		$775040

Calculation:

1. Social security tax:

= [Sales salaries + Warehouse salaries + Office salaries] * 6%

= [$625000 + $240000 + $320000] * 6%

= $1185000 * 6%

= $71100

2. Medicare tax:

= [Sales salaries + Warehouse salaries + Office salaries] * 1.5%

= [$625000 + $240000 + $320000] * 1.5%

= $1185000 * 1.5%

= $17775

3. Salaries payable:

= [Sales salaries + Warehouse salaries + Office salaries] - [Employees income tax + Social security tax + Medicare tax + Bonds deductions + Group insurance]

= [$625000 + $240000 + $320000] - [$232260 + $71100 + $17775 + $35500 + $53325]

= $775040

2b. Answer -

Date	Account	Debit	Credit
Jan. 04	Payroll tax expense	$162345
	Social security tax payable		$71100
	Medicare tax payable		$17775
	State unemployment tax payable		$63990
	Federal unemployment tax payable		$9480

Calculation:

As per given information, $1185000 is subject to unemployment compensation taxes.

So,

1. State unemployment tax:

= $1185000 * 5.4%

= $63990

2. Federal unemployment tax:

= $1185000 * 0.8%

= $9480

3. Payroll tax expense:

= Social security tax + Medicare tax + State unemployment tax + Federal unemployment tax

= $71100 + $17775 + $63990 + $9480

= $162345