Question

a. Cal Ruther, an employer, is subject to FICA taxes but exempt from FUTA and SUTA...

a. Cal Ruther, an employer, is subject to FICA taxes but exempt from FUTA and SUTA taxes. During the last quarter of the year, his employees earned monthly wages of $9,600, all of which is taxable. The amount of federal income taxes withheld each month is $1,250. Journalize the payment of wages, and record the payroll tax on November 30.

If an amount box does not require an entry, leave it blank or enter "0". When required, round your answers to the nearest cent.

Account Debit Credit
Nov. 30 Wages Expense
FICA Taxes Payable-OASDI
FICA Taxes Payable-HI
Employees FIT Payable
Cash
           
Nov. 30 Payroll Taxes
FICA Taxes Payable-OASDI
FICA Taxes Payable-HI

b. Prior to posting the November 30 payroll transaction, FICA Taxes Payable-OASDI, FICA Taxes Payable-HI, and Employees FIT Payable had zero balances. Ruther must pay the FICA taxes and income taxes withheld on the November 30 payroll. Journalize the electronic transfer of the payroll taxes on December 15.

If an amount box does not require an entry, leave it blank or enter "0". Round your answers to the nearest cent.

Date Account Debit Credit
Dec. 15 FICA Taxes Payable-OASDI
FICA Taxes Payable-HI
Employees FIT Payable
Cash
Business   Accounting   
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Answer #1

a.

Date Account Debit Credit
Nov.30 Wage Expense $9,600
FICA Taxes Payable-OASDI $595
FICA Taxes Payable-HI $139
Employees FIT Payable $1,250
Cash $7,616
Nov.30 Payroll Taxes $734
FICA Taxes Payable-OASDI $595
FICA Taxes Payable-HI $139

Explanation:

Calculation of FICA Taxes Payable-OASDI as follows:

Taxable Wages = $9,600

OASDI Rate = 6.2%

FICA Taxes Payable-OASDI = $9,600 * 6.2% = $595.20

Calculation of FICA Taxes Payable-HI as follows:

Taxable Wages = $9,600

HI Rate = 1.45%

FICA Taxes Payable-HI = $9,600 * 1.45% = $139.20

b.

Date Account Debit Credit
Dec.15 FICA Taxes Payable-OASDI $1,190
FICA Taxes Payable-HI $278
Employees FIT Payable $1,250
Cash $2,718

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