Question

Juan's Mexican Restaurant incurred salaries expense of $69,000 for 2018. The payroll expense includes employer FICA tax, in addition to state unemploymeny tax and federal unemployment tax. Of the total salaries, $23,000 is subject to unemployment tax. Also, the company provides the following benefits for employees: health insurance (cost to the company, $2,500), life insurance (cost to the company, $420), and retirement benefits (cost to the company, 6% of salaries expense).

REQUIREMENTS:

1. Journalize Juan's expenses for employee benefits and for payroll taxes.

2. What was Juan's total expense for 2018 related to payroll?

Answer 1

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Format and Naming convention in not available, can be slightly different: As per tax year 2018: Solution: Journal entries Date Credit Debit $ 6,658.50 $4,278.00 $1,000.50 $1,242.00 $ 138.00 Account title and explaination Payroll Taxes Expense (plug) FICA OASDI Taxes Payable (69000*6.2%) FICA medicare taxes payable (69000*1.45%) State unemployment Taxes Payable (23000*5.4%) Federal unemployment Taxes Payable (23000*0.6%) (To record the payroll tax expense) Exployee benefit expense (plug) Employee health insurance Payable Employee life insurance Payable Employee retirement benefits Payable (69000*6%) (To record the employee benefit expense) $ 7,060.00 $ 2,500.00 $ 420.00 $ 4,140.00 Juan's Total Expense for 2018 related to payroll: Salaries Expense Payroll tax expense Employee benefit expense Juan's Total Expense for 2018 related to payroll $ 69,000 $ 6,659 $ 7,060 $ 82,719 or: 82718.50