Question

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

Total payroll was $458,000, of which $112,000 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 (the maximum for both federal and state unemployment tax) was $416,000. Income taxes in the amount of $84,100 were withheld, as was $9,200 in union dues. The state unemployment tax is 3.5%, but Cullumber 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 Cullumber makes more than $135,000. 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.

Answer 1

Answer
	Explanation	Debit	Credit
a	Salaries and Wages Expense	$458,000
	Withholding Income Taxes Payable		$ 84,100
	FICA Taxes Payable		$ 28,093	(458000-112000)*7.65%+(112000*1.45%)
	Union Dues Payable		$    9,200
	Cash		$336,607
b	Payroll Tax Expense	$ 28,933
	FICA Taxes Payable		$ 28,093
	Federal Unemployment Tax payable(FUTA)		$       336	(458000-416000)*0.8%
	State Unemployment Tax payable(SUTA)		$       504	(458000-416000)*(3.5%-2.3%)

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