Entries for payroll transactions LO2 LO6
Tavella Company’s first weekly pay period of the year ends on January 8. On that date, the column totals in Tavella’s payroll register indicate its sales employees earned $34,745, its office employees earned $21,225, and its delivery employees earned $1,030. The employees are to have withheld from their wages FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $8,625 of federal income taxes, $1,160 of medical insurance deductions, and $138 of union dues. No employee earned more than $7,000 in the first pay period. Tavella Company does not pay medical insurance premiums or union dues for its employees.
Required
1. Compute Tavella Company’s FICA Social Security taxes payable and FICA Medicare taxes payable.
Prepare the journal entry to record Tavella Company’s January 8 (employer) payroll expenses and liabilities.
2. Prepare the journal entry to record Tavella’s (employer) unemployment taxes resulting from the January 8 payroll. Tavella’s merit rating reduces its state unemployment tax rate to 3.4% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.8%.
Check (1) Cr. FICA—Social Security
Taxes Payable, $3,534
(2) Dr. Payroll Taxes Expense,
$2,394
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