Question

Ricardo's Mexican Restaurant incurred salaries expense of $62,000 for 2018. The payroll expense includes employer FICA tax, in addition to state unemployment tax and federal unemployment tax. Of the total salaries, $22,000 is subject to unemployment tax. Also, the company provides the following benefits for employees: health insurance (cost to the company, $3,000), life insurance (cost to the company, $330), and retirement benefits (cost to the company, 10% of salaries expense). 6(Click the icon to view payroll tax rate information.) Read the requirements. Requirement 1. Journalize Ricardo's expenses for employee benefits and for payroll taxes. Explanations are not required. Begin with the entry to accrue Ricardo's employer payroll taxes. (Round all amounts to the nearest cent. Record debits first, then credits. Exclude explanations from journal entries.) Date Debit Accounts Credit Requirements 1. Journalize Ricardo's expenses for employee benefits and for payroll taxes. Explanations are not required. 2. What was Ricardo's total expense for 2018 related to payroll? Print Done

Answer 1

Part 1

Date	Accounts	Debit	Credit
	Payroll Tax Expense	6063
	FICA-OASDI Taxes Payable (6.2% × $62,000)		3844
	FICA-Medicare Taxes Payable (1.45 % × $62,000)		899
	Federal Unemployment Taxes Payable (0.6% × $22,000)		132
	State Unemployment Taxes Payable (5.4% × $22,000)		1188
	To record employer's payroll tax expense.
	Employee Benefits Expense	9530
	Employee Health Insurance Payable		3000
	Employee Life Insurance Payable		330
	Employee Retirement Benefits Payable (10%*62000)		6200
	Accrual of employee benefit expenses

Part 2

Ricardo's total expense for 2018 related to payroll = salaries + Payroll Tax Expense + Employee Benefits Expense = 62000+6063+9530 = $77593