Question

Required information Use the following information for the Exercises below. [The following information applies to the...

Required information

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $128,400 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to its employee.

Gross Pay through
August 31
Gross Pay for
September
a. $ 6,400 $ 800
b. 2,000 2,100
c. 122,100 8,000

Exercise 9-7 Payroll-related journal entries LO P3

Assuming situation (a), prepare the employer’s September 30 journal entries to record the employer’s payroll taxes expense and its related liabilities.

Homework Answers

Answer #1

Calculation of Payroll taxes expense

Tax September Earnings Subject to Tax Tax rate Tax amount
FICA Social security Tax 800 6.2% 49.60
FICA Medicare Tax 800 1.45% 11.60
FUTA (7000 -6400)=600 0.6% 3.6
SUTA (7000 -6400)=600 5.4% 32.40
Total Payroll Tax expenses 97.20

JOURNAL

Particulars Debit Credit

Payroll Tax Expense

FICA Social Security Tax payable

  FICA Medicare Tax payable

FUTA payable

SUTA payable

97.20

49.60

11.60

3.60

32.40

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