Question

Recording Payroll Taxes According to a summary of the payroll of Kirby Co., $487,000 in earnings...

Recording Payroll Taxes

According to a summary of the payroll of Kirby Co., $487,000 in earnings were subject to the 7.6% FICA tax. Also, $80,355 in earnings were subject to state and federal unemployment taxes.

Round your answers to the nearest cent.

a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 4.8%; federal unemployment, 1.1%.
$

b. Illustrate the effects on the accounts and financial statements of recording the accrual of payroll taxes. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

Statement of Cash Flows Balance Sheet Income Statement
Assets = Liabilities + Stockholders' Equity
+ = + + +
Statement of Cash Flows Income Statement
Business   Accounting   
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Homework Answers

Answer #1
a)
FICA taxes $ 37,012
( $ 487,000 x 7.6% )
State unemployment tax $ 3,857.04
( $ 80,355 x 4.8% )
Federal unemployment tax $ 883.905
( $ 80,355 x 1.1% )
Employer's payroll taxes $ 41,752.945 (or) $ 41,752.95
b) Balance Sheet
Statement of cash flows Assets Liabilities Stockholders' Equity Income Statement
No effect No effect FICA tax payable SUTA payable FUTA payable Retained Earnings
$ 37,012 $ 3,857.04 $ 883.905 $ 41,752.945 (or) $ 41,752.95
Statement of cash flows Income Statement
No effect Payroll tax expense $ 41,752.945 (or) $ 41,752.95
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