Question

Kip Bowman is owner and sole employee of KB Corporation. He pays himself a salary of $1,550 each week.

Additional tax information includes:
FICA tax—OASDI		6.2% on first $132,900
FICA tax—HI		1.45% on total pay
Federal income tax		$232.50 per pay
State income tax		22% of the federal income tax withholding
Federal unemployment tax		0.6% on first $7,000
State unemployment tax		0.05% on first $14,000
Additional payroll deductions include:
401(k) plan		3% per pay
Child support garnishment		$115 per pay
Health insurance premium		$100 per pay

Record the payroll entry and payroll tax entry for the pay of the week ended June 7 (his year-to-date pay is $32,550).

If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent.

	Account	Debit	Credit
Payment of wages	Wages Expense
	FICA Taxes Payable-OASDI
	FICA Taxes Payable-HI
	Employees FIT Payable
	Employees SIT Payable
	Retirement Plan Contributions Payable
	Garnishment Payable
	Health Insurance Premiums Payable
	Cash
Payroll taxes	Payroll Taxes
	FICA Taxes Payable-OASDI
	FICA Taxes Payable-HI

Feedback

Debit Wages (Gross Pay); credit employee's withholdings and Cash (net pay). Debit payroll taxes (total applicable employer's payroll taxes); Credit respective employer's payroll tax liabilities. Remember: Debits must equal credits!

Answer 1

	Account	Debit	Credit
Payment of wages	Wages expense	1550.00
	FICA Taxes Payable-OASDI (6.2% x $1550)		96.10
	FICA Taxes Payable-HI (1.45% x $1550)		22.48
	Employees FIT Payable		232.50
	Employees SIT Payable (22% x $232.50)		51.15
	Retirement Plan Contributions Payable (3% x $1550)		46.50
	Garnishment Payable		115.00
	Health Insurance Premiums Payable		100.00
	Cash		886.28
Payroll taxes	Payroll taxes	118.58
	FICA Taxes Payable-OASDI (6.2% x $1550)		96.10
	FICA Taxes Payable-HI (1.45% x $1550)		22.48