Question

Gardner Corp. pays its employees monthly. The payroll information listed below is for January 2020, the first month of Gardner's fiscal year.
  

Salaries	$400,000
Federal income taxes to be withheld	80,000
Federal unemployment tax rate	0.80%
State unemployment tax rate (after FUTA deduction)	5.40%
Social Security tax rate	6.2%
Medicare tax rate	1.45%

Required:

Prepare the appropriate journal entries to record salaries and wages expense and payroll tax expense for the January 2020 pay period.

Answer 1

Ans:

Journal entries:
Date	Accounts title and explanations				Debit $	Credit $
a.	Salaries and wages expenses				400,000
	Federal income tax Payable					80,000
	FICA Social security tax (400000*6.2%)					24,800
	FICA Medicare Payable(400,000*1.45%)					5,800
	Salaries and wages payable					289,400
b.	Payroll tax expenses				55,400
	FICA Social security tax (400000*6.2%)					24,800
	FICA Medicare Payable(400,000*1.45%)					5,800
	Federal Unemployment tax payable (400000*0.80%)					3,200
	State Unemployment tax payable (400000*5.40%)					21,600

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