Question

Caribbean Tours' total payroll for the month of January was $590,000. The following withholdings, fringe benefits, and payroll taxes apply:

   

Federal and state income tax withheld	$ 59,000
Health insurance premiums paid by employer (payable to Blue Cross)	10,620
Contribution to retirement plan paid by employer (payable to Fidelity)	23,600
FICA tax rate (Social Security and Medicare)	7.65 %
Federal and state unemployment tax rate	6.20 %

  

Assume that none of the withholdings or payroll taxes has been paid by the end of January (record them as payables), and no employee's cumulative wages exceed the relevant wage bases.

Required:

1. Record the employee salary expense, withholdings, and salaries payable.
2. Record the employer-provided fringe benefits.
3. Record the employer payroll taxes.

Answer 1

	Date	General Journal	Debit	Credit
1	Jan. 31	Salary expense	590000
		Federal and state income taxes payable		59000
		FICA taxes payable (7.65% x $590000)		45135
		Salary payable		485865
		(To record employee salaries for the month)
2	Jan. 31	Fringe benefits expense	34220
		Health insurance premium payable		10620
		Retirement plan contribution payable		23600
		(To record employee fringe benefits)
3	Jan. 31	Payroll taxes expense	81715
		FICA taxes payable (7.65% x $590000)		45135
		Federal and state unemployment taxes payable (6.20% x $590000)		36580
		(To record payroll tax expense)