Question

During the month of March, Oriole Company's employees earned wages of $80,000. Withholdings related to these wages were $6,120 for FICA, $9,600 for federal income tax, $4,000 for state income tax, and $480 for union dues. The company incurred no cost related to these earnings for federal unemployment tax but incurred $800 for state unemployment tax. Prepare the necessary March 31 journal entry to record salaries and wages expense and salaries and wages payable. Assume that wages earned during March will be paid during April. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation Mar 31 Prepare the entry to record the company's payroll tax expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation Mar. 31

Answer 1

Journal entry are shown as follows
Date	Account titles and Explanation	Debit	Credit
31-Mar	Salaries and wages expense	$80,000
	FICA taxes payable		$6,120
	Federal income tax payable		$9,600
	State income tax payable		$4,000
	Union dues payable		$480
	Salaries and wages payable		$59,800	(80000-6120-9600-4000-480)
	(To record salaries and wages expense)
Expense is debited for increase and other amount represents liability which needs to be paid by company to government authorities and employees in future date and thus they are credited for increase in liability.
Date	Account titles and Explanation	Debit	Credit
31-Mar	Payroll expense	$800
	State unemployment tax payable		$800
	(To record payroll expense)
Payroll is expense and thus debited for increase
State unemployment tax payable is liability and thus credited for increase.