Question

During the month of February, Indigo Corporation's employees earned wages of $105,080. Withholdings related to these wages were $8,039 for Social Security (FICA), $10,082 for federal income tax, and $2,698 for state income tax. Costs incurred for unemployment taxes were $156 for federal and $227 for state. Prepare a tabular summary to record on February 28 (a) (b) Salaries and wages expense and salaries and wages payable assuming that all February wages will be paid in March The company's payroll tax expense. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.) Assets Liabilities Stockholders' Equity Retained Earnings Cash = Salaries & Sa Fed. Inc. Wages Pay. . Taxes Pay. FICA Taxes Pay. St. Inc. Taxes Pay. Fed. Unemp. Taxes Pay. . State Unemp. 1 Taxes Pay. Common Stock + Revenue - Expense - Dividend > > x x x (a) Feb. 28 ) 84261 2698 Salaries & wages expense x > (b) Feb. 28 227 Payroll tax expense

Answer 1

Assets

=

Liabilities

Stockholders’ equity

Retained earnings

Cash

Salaries and wages payable

+

Fed inc taxes payable

+

FICA taxes payable

+

State income taxes payable

+

Fed. Unemp. Taxes pay.

+

State unemp. Taxes pay.

Common stock

+

revenue

-expenses

-

Dividend

a ) feb. 28

84261

10082

8039

2698

105080

Salaries and wages expense

b) feb 28

8039

156

227

8422

Payroll tax expense

No.	date	General journal	Debit	Credit
A	Feb. 28	Salaries and Wages Expense	105080
		FICA Taxes Payable		8039
		Federal Income Taxes Payable		10082
		State Income Taxes Payable		2698
		Salaries and Wages Payable		84261
B	Feb. 28	Payroll Tax Expense	8422
		FICA Taxes Payable		8039
		Federal Unemployment Taxes Payable		156
		State Unemployment Taxes Payable		227