Question

Alamar Petroleum Company offers its employees the option of contributing retirement funds up to 5% of their salaries, with the contribution being matched by Alamar. The company also pays 75% of medical and life insurance premiums. Deductions relating to these plans and other payroll information for the first biweekly payroll period of February are listed as follows: Wages and salaries Employee contribution to voluntary retirement plan Medical insurance premiums Life insurance premiums Federal income taxes to be withheld Local income taxes to be withheld Payroll taxes: Federal unemployment tax rate State unemployment tax rate (after SUTA deduction) Social Security tax rate Medicare tax rate $3,900,000 103,000 61,000 10,900 590,000 72,000 0.60% 5.40% 6.20% 1.45% Required: Prepare the appropriate journal entries to record salaries expense and payroll tax expense for the biweekly pay period. Assume that all employees' cumulative wages do not exceed the relevant wage bases for Social Security, FUTA or SUTA. Salaries are not yet paid. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

DR CR 3900000 Particulars Wages and salaries expense Federal income tax payable Withholding taxes payable Social security taxes payable Medicare taxes payable Medical insurance payable Life insurance payable Retirement plan payable (Employeeinvestment) Wages and salaries payable To record wages and salaries expenses $ 5,90,000.00 $ 72,000.00 $ 2,41,800.00 =3900000*6.2% $ 56,550.00 =3900000*1.45% $ 15,250.00=61000*25% $ 2,725.00 =10900*25% $ 1,03,000.00 $ 28,18,675.00 $5,32,350.00 Payroll taxes expense Social security taxes payable Medicare taxes payable FUTA payable State unemployement tax To record payroll taxes expense $ 2,41,800.00 =3900000*6.2% $ 56,550.00 =3900000*1.45% $ 23,400.00 =3900000*0.6% $ 2,10,600.00 =3900000*5.4% $ 1,56,925.00 Wages and salaries expenses (Fringe benefits) Medical insurance payable Life insurance payable Retirement plan payable (Employee investment) $ 45,750.00 =61000*75% $ 8,175.00 =10900*75% $ 1,03,000.00