Question

Exercise 13-06

The payroll of Skysong Company for September 2019 is as follows.

Total payroll was $450,000, of which $118,000 is exempt from Social Security tax because it represented amounts paid in excess of $128,400 to certain employees. The amount paid to employees in excess of $7,000 was $439,000. Income taxes in the amount of $77,200 were withheld, as was $9,600 in union dues. The state unemployment tax is 3.5%, but Skysong Company is allowed a credit of 2.3% by the state for its unemployment experience. Also, assume that the current FICA tax is 7.65% on an employee’s wages to $128,400 and 1.45% in excess of $128,400. No employee for Skysong makes more than $125,000. The federal unemployment tax rate is 0.8% after state credit.

Prepare the necessary journal entries if the wages and salaries paid and the employer payroll taxes are recorded separately. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts .Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
enter an account title to record wages and salaries paid	enter a debit amount	enter a credit amount
enter an account title to record wages and salaries paid	enter a debit amount	enter a credit amount
enter an account title to record wages and salaries paid	enter a debit amount	enter a credit amount
enter an account title to record wages and salaries paid	enter a debit amount	enter a credit amount
enter an account title to record wages and salaries paid	enter a debit amount	enter a credit amount
(To record wages and salaries paid)
enter an account title to record employer payroll taxes	enter a debit amount	enter a credit amount
enter an account title to record employer payroll taxes	enter a debit amount	enter a credit amount
enter an account title to record employer payroll taxes	enter a debit amount	enter a credit amount
enter an account title to record employer payroll taxes	enter a debit amount	enter a credit amount
(To record employer payroll taxes)

Answer 1

Account Titles and Explanation	Debit	Credit
Salaries and Wages Expense	450000
Withholding Income Taxes Payable		77200
FICA Taxes Payable		27109	=(450000-118000)*7.65%+(118000*1.45%)
Union Dues Payable		9600
Cash		336091
(To record wages and salaries paid)
Payroll Tax Expense	27329
FICA Taxes Payable		27109
Federal unemployment(FUTA) Taxes Payable		88	=(450000-439000)*0.8%
State unemployment (SUTA) Taxes Payable		132	=(450000-439000)*(3.5%-2.3%)
(To record employer payroll taxes)