Question

The following information pertains to a firm’s payroll.

Monthly payroll of $16,000 that is entirely subject to:

FICA and Medicare taxes (7.65%)

Federal taxes (9%)

State taxes (3%)

In addition, union dues of $500 is also withheld by the employer to be payable to the union.

Also, employee monthly contributions to The American Red Cross total $400.

In addition, the employer incurs:

A matching portion of FICA and Medicare taxes (7.65%)

Federal unemployment taxes (1%)

State unemployment taxes (3%)

Required: Show the two payroll entries.

Answer 1

Answer:

	Account Title	Debit	Credit
1	Salaries and wages	$          16,000
	Employee FICA and medicare tax payable		$           1,224
	Federal W/H taxes payable		1,440
	State W/H taxes payable		480
	Employee contribution to American red cross		400
	Employee union dues Payable		500
	Salaries payable		11,956
2	Payroll taxes expense	$            1,864
	FICA and medicare tax payable		1,224
	Federal unemployment taxes payable		160
	State unemployment taxes payable		480
3	Salaries payable	$          11,956
	FICA and medicare tax payable	2,448
	Federal W/H taxes payable	1,440
	State W/H taxes payable	480
	Federal unemployment taxes payable	160
	State unemployment taxes payable	480
	Employee contribution to American red cross	400
	Employee union dues Payable	500
	Cash		17,864