Question

An extract from the trial balance of Paragon Corporation at December 31, 2019 is reproduced below:

		Amount in unadjusted trial balance	Amount in adjusted trial balance
a.	Salaries expense (J. Smith)	$50,000	$52,000
b.	Employee income taxes payable	$0	$500
c.	FICA Social Security taxes payable	$0	$248
d.	FICA Medicare taxes payable	$0	$ 58

Additional information: Employees pay 6.2% of their gross salaries to Social Security and 1.45% of gross salaries to Medicare. The company matches employees’ Social Security and Medicare contributions 1 to 1.

1. Prepare the adjusting entry that was posted to record the salary payable.
2. Prepare the adjusting entry that was posted to record the company’s payroll expenses.
3. Prepare the journal entries to record the payments on January 5, 2020 to employee J. Smith and the Internal Revenue Service.

Answer 1

		Debit	Credit
A.	Salary Expenses Account	2000
	Employee income taxes payable		500
	FICA Social Security taxes payable		124
	FICA Medicare taxes payable		29
	Salary Payable Account		1347
	(Being adjusting entry posted to record the salary payable of $2000 to Mr.J. Smith)
		Debit	Credit
B.	FICA Social Security Expenses	124
	FICA Medicare taxes Expenses	29
	FICA Social Security taxes payable		124
	FICA Medicare taxes payable		29
	(Being adjusting entry posted to record the company’s payroll expenses)
		Debit	Credit
C.	Salary Payable Account	1347
	FICA Social Security taxes payable	248
	FICA Medicare taxes payable	58
	Employee income taxes payable	500
	Bank Account		2153
	(Being payments on January 5, 2020 to employee J. Smith and the Internal Revenue Service)