Question

During January, Luxury Cruise Lines incurs employee salaries of $1.0 million. Withholdings in January are $76,500 for the employee portion of FICA, $150,000 for federal income tax, $62,500 for state income tax, and $10,000 for the employee portion of health insurance (payable to Blue Cross Blue Shield). The company incurs an additional $62,000 for federal and state unemployment tax and $30,000 for the employer portion of health insurance.

Required:

1.-3. Record the necessary entries in the Journal Entry Worksheet below. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)

Journal entry worksheet

• Record the employee salary expense, withholdings, and salaries payable.

Note: Enter debits before credits.

	Date General Journal Debit Credit January 31

Journal entry worksheet

• Record the employer-provided fringe benefits.

Note: Enter debits before credits.

	Date General Journal Debit Credit January 31

Journal entry worksheet

• Record the employer payroll taxes.

Note: Enter debits before credits.

	Date General Journal Debit Credit January 31

Answer 1

Journal Entries:

1)
Date	General Journal	Debit	Credit
January. 31	Salaries Expense	$1,000,000
	FICA Taxes Payable		$76,500
	Federal Income Taxes Payable		$150,000
	State Income Taxes Payable		$62,500
	Health Insurance Payable		$10,000
	Salaries Payable ($1,000,000 - $76,500 - $150,000 - $62,500 - $10,000)		$701,000
	(To record the employee salary expense, withholdings and salaries payable)
2)
Date	General Journal	Debit	Credit
January. 31	Salaries Expense	$30,000
	Accounts Payable		$30,000
	(To record the employer-provided fringe benefits)
3)
Date	General Journal	Debit	Credit
January. 31	Payroll Tax Expense ($76,500 + $62,000)
	FICA Taxes Payable		$76,500
	Unemployment Taxes Payable		$62,000
	(To record the employer's payroll taxes expense)