Question

The following monthly data are taken from Ramirez Company at July 31: Sales salaries, $560,000; Office salaries, $112,000; Federal income taxes withheld, $168,000; State income taxes withheld, $37,500; Social security taxes withheld, $41,664; Medicare taxes withheld, $9,744; Medical insurance premiums, $13,500; Life insurance premiums, $10,500; Union dues deducted, $7,500; and Salaries subject to unemployment taxes, $63,000. The employee pays 40% of medical and life insurance premiums. Assume that FICA taxes are identical to those on employees and that SUTA taxes are 5.4% and FUTA taxes are 0.6%.

1&2. Using the above information, complete the below table and prepare the journal entries to record accrued payroll and cash payment of the net payroll for July.
3. Using the above information, complete the below table.
4. Record the accrued employer payroll taxes and all other employer-paid expenses and the cash payment of all liabilities for July-assume that FICA taxes are identical to those on employees and that SUTA taxes are 5.4% and FUTA taxes are 0.6%.

Answer 1

Ans:

	Total Premium	% paid	Premium paid by employees	Premium paid by employer
Employees Medical Insurance Payable	$13500	40%	$5400	$8100
Employees Life Insurance Payable	$10500	40%	$4200	$6300

Date	General Journal	Debit ($)	Credit ($)
July 31	Sales salaries expenses	$560000
	Office salaries expenses	$112000
	Employee Federal Income tax payable		$168000
	Employee State Income tax payable		$37500
	FICA-Social security taxes payable		$41664
	FICA-Medicare taxes payable		$9744
	Employees Medical Insurance Payable		$5400
	Employees Life Insurance Payable		$4200
	Employee union dues payable		$7500
	Salaries payable		$397992
July 31	Salaries payable	$397992
	Cash		$397992
July 31	Payroll taxes expenses	$69588
	FICA-Social security taxes payable		$41664
	FICA-Medicare taxes payable		$9744
	Employees Medical Insurance Payable		$8100
	Employees Life Insurance Payable		$6300
	State Unemployment taxes payable ($63000*5.4%)		$3402
	Federal unemployment taxes payable ($63000*0.6%)		$378
	Employee Federal Income tax payable	$168000
	Employee State Income tax payable	$37500
	FICA-Social security taxes payable	$83328
	FICA-Medicare taxes payable	$19488
	Employees Medical Insurance Payable	$13500
	Employees Life Insurance Payable	$10500
	Employee union dues payable	$7500
	State Unemployment taxes payable ($63000*5.4%)	$3402
	Federal unemployment taxes payable ($63000*.6%)	$378
	Cash		$343596
	(Being Liabilities paid)