Question

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.

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