Question

On January 8, the end of the first weekly pay period of the year, Regis Company's payroll register showed that its employees earned $27,760 of office salaries and $60,840 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes at the rate of 6.20%, FICA Medicare taxes at the rate of 1.45%, $13,560 of federal income taxes, $1,390 of medical insurance deductions, and $920 of union dues. No employee earned more than $7,000 in this first period.

Required:
1.1 Calculate below the amounts for each of these four taxes of Regis Company. Regis’s merit rating reduces its state unemployment tax rate to 5% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.60%. (Round your answers to 2 decimal places.)

Regis Company's: Tax FICA-Social Security FICA-Medicare FUTA SUTA January 8 earnings subject to tax Tax Rate Tax Amount

1.2 Prepare the journal entry to record Regis Company's January 8 (employee) payroll expenses and liabilities. (Round your answers to 2 decimal places.)

2. Prepare the journal entry to record Regis’s (employer) payroll taxes resulting from the January 8 payroll. Regis’s merit rating reduces its state unemployment tax rate to 5% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.60%. (Round your answers to 2 decimal places.)

Answer 1

Answer

Regis Company’s:
Tax	January 8 earnings subject to tax $	Tax Rate	Tax Amount $
FICA-Social Security	88600	6.20%	5493.20
FICA-Medicare	88600	1.45%	1284.70
FUTA	88600	0.60%	531.60
SUTA	88600	5.00%	4430.00

Office salaries= $27760

Sales salaries= $60840

Total of office and sales salaries adds up to $88600 i.e. total earnings.

By applying the tax rates to the total earnings we get tax amount in the last column.

88600*6.2%=5493.20

88600*1.45%=1284.7

88600*0.60%=531.6

88600*5%=4430

Journal entry to record Regis company's January 8 payroll expenses and liabilities.

Date	General Journal	Debit	Credit
Jan 08	Office salaries expense	27760.00
	Sales salaries expense	60840.00
	FICA—Social sec. taxes payable		5493.20
	FICA—Medicare taxes payable		1284.70
	Employee fed. income taxes payable		13560.00
	Employee medical insurance payable		1390.00
	Employee union dues payable		920.00
	Salaries payable		65952.10
	(Recording of payroll expenses and liabilities)

Salaries payable is the balance remaining after deducting taxes, insurance and union dues from the total earnings.

(2)Journal entry to record Regis company's January 8 payroll expenses

Date	General Journal	Debit	Credit
Jan 08	Payroll taxes expense	11739.50
	FICA—Social sec. taxes payable		5493.20
	FICA—Medicare taxes payable		1284.70
	State unemployment taxes payable		4430.00
	Federal unemployment taxes payable		531.60
	(Recording of payroll expenses)