Question

On January 8, the end of the first weekly pay period of the year, Regis Company's payroll register showed that its employees earned $26,760 of office salaries and $60,840 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes at the rate of 6.20%, FICA Medicare taxes at the rate of 1.45%, $13,060 of federal income taxes, $1,370 of medical insurance deductions, and $800 of union dues. No employee earned more than $7,000 in this first period.

Required:
1.1 Calculate below the amounts for each of these four taxes of Regis Company. Regis’s merit rating reduces its state unemployment tax rate to 3% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.60%. (Round your answers to 2 decimal places.)
  


1.2 Prepare the journal entry to record Regis Company's January 8 (employee) payroll expenses and liabilities. (Round your answers to 2 decimal places.)
  


2. Prepare the journal entry to record Regis’s (employer) payroll taxes resulting from the January 8 payroll. Regis’s merit rating reduces its state unemployment tax rate to 3% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.60%. (Round your answers to 2 decimal places.)
  

Answer 1

1.1
Regis Company’s:
Tax	January 8 earnings subject to tax	Tax Rate	Tax Amount
FICA-Social Security	$87,600	6.20%	$5,431.20
FICA-Medicare	$87,600	1.45%	$1,270.20
FUTA	$87,600	0.60%	$525.60
SUTA	$87,600	3.00%	$2,628.00
1.2
Date	General Journal	Debit	Credit
8-Jan	Office salaries expense	26,760.00
	Sales salaries expense	60,840.00
	FICA—Social sec. taxes payable		5,431.20
	FICA—Medicare taxes payable		1,270.20
	Employee fed. inc. taxes payable		13,060.00
	Employee medical insurance payable		1,370.00
	Employee union dues payable		800
	Salaries payable		65,668.60
2
Date	General Journal	Debit	Credit
8-Jan	Payroll taxes expense	9,855.00
	FICA—Social sec. taxes payable		5,431.20
	FICA—Medicare taxes payable		1,270.20
	State unemployment taxes payable		2,628.00
	Federal unemployment taxes payable		$525.60