Question

15.

Airline Temporary Services (ATS) pays employees monthly. Payroll information is listed below for January, the first month of ATS’s fiscal year. Assume that none of the employees exceeds the federal unemployment tax maximum salary of $7,000 in January.

  

Salaries expense	$580,000
Federal and state income tax withheld	116,000
Federal unemployment tax rate	0.8 %
State unemployment tax rate (after FUTA deduction)	5.4 %
Social security (FICA) tax rate	7.65 %

  

Required:

Record salaries expense and payroll tax expense for the January pay period. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Journal entry worksheet

-Record the employee salary, withholdings, and salaries payable.

-Record the employer payroll tax expense.

Answer 1

DATE	JOURNAL ENTRY	DEBIT	CREDIT
January 1	Salaries Expense	$580,000
	Employee Income Tax Payable		116,000
	FICA Tax Payable		44370
	Salaries Payable		419630

Explanation

FICA tax payable = Salaries Expense*Tax Rate = 580000 * 7.65 % = 44370

DATE	JOURNAL ENTRY	DEBIT	CREDIT
January 1	Employer Payroll Tax Expense	80330
	State Unemployment Payable		31320
	Federal Unemployment Payable		4640
	FICA Tax Payable		44370

Explanation

Federal Unemployment Payable= $580,000 * 0.8% = 4640

State Unemployment Payable = $580,000 * 5.4% = 31320