Question

The summary of the payroll for the monthly pay period ending July 15 indicated the following:

Sales salaries $125,000

Office salaries 35,000

Federal Income tax withheld 32,300

Medicate tax withheld 2,550

Social security tax withheld 10,200

Medical insurance withheld 7,370

Journalize the entries (2 entries) to record (a) the payroll and (b) the employer's payroll tax expense for the month. The state unemployment rate is 5.4% and the federal unemployment rate is 0.8%. Only $55,000 of total salaries are subject to unemployment taxes.

Answer 1

Solution:

Journal entries

Date	Particulars	Debit($)	Credit($)
a.	Expenses on Sales salaries A/c Dr	$125,000
	Expenses on office A/c Dr	$35,000
	To Medical insurance   Payable A/c		$7,370
	To Federal Income tax   Payable A/c		$32,300
	To Social security tax Payable A/c		$10,200
	To Medicate tax Payable A/c		$2,550
	To Cash A/c		$107,580
	(To record the payroll)
b.	Tax expenses on payroll A/c Dr	$16,160
	To  Medicate tax Payable A/c		$2,550
	To Social security tax Payable A/c		$10,200
	To federal unemployement tax payable A/c ($55,000*0.8%)		$440
	To State unemployement tax payable A/c ($55,000*5.4%)		$2,970
	(To record the employer's payroll tax expense for the month)