Question

According to a summary of the payroll of Guthrie Co., $790,000 was subject to the 6.0% social security tax and the 1.5% Medicare tax. Also, $40,000 was subject to state and federal unemployment taxes.

Required: A. Calculate the employer’s payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.6%. B. On December 31, journalize the entry to record the accrual of payroll taxes. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

A
	Social Security Tax Payable	47400	=790000*6%
	Medicare Tax Payable	11850	=790000*1.5%
	State Unemployment Tax Payable	2160	=40000*5.4%
	Federal Unemployment Tax Payable	240	=40000*0.6%
	Employer’s payroll taxes	61650
B
Date	Description	Debit	Credit	Assets	Liabilities	Equity
Dec 31	Payroll Tax Expense	61650				↓
	Social Security Tax Payable		47400		↑
	Medicare Tax Payable		11850		↑
	State Unemployment Tax Payable		2160		↑
	Federal Unemployment Tax Payable		240		↑