Question

Recording Payroll and Payroll Taxes
Beamon Corporation had the following payroll for April:

Officers' salaries	$320,000
Sales salaries	670,000
Federal income taxes withheld	190,000
FICA taxes withheld	75,000
Health insurance premiums withheld	16,000
Union dues withheld	12,000
Salaries (included above) subject to federal unemployment taxes	550,000
Salaries (included above) subject to state unemployment taxes	600,000

Required:

Prepare journal entries on April 30 to record:

a. Accrual of the monthly payroll.
b. Payment of the net payroll.
c. Accrual of employer's payroll taxes. (Assume that the FICA tax matches the amount withheld, the federal unemployment tax is 0.6 percent, and the state unemployment tax is 5.4 percent.)
d. Payment of all liabilities related to this payroll. (Assume that all are settled at the same time.)

Answer 1

Journal Entry
S. No.	Account Titles and explanation	Debit	Credit
A.	Office Salaries Expense	$320,000
	Sales Salaries Expense	$670,000
	Salaries Payable		$697,000
	FICA Taxes Withheld		$75,000
	Health insurance Premium With Held		$16,000
	Federal income Tax Withheld		$190,000
	Union Dues Withheld		$12,000
	To Record Accrual of Monthly Payroll
B.	Salaries Payable	$697,000
	Cash		$697,000
	To Record Payment of Net Payroll
C.	Payroll Tax Expense	$110,700
	FICA Taxes Withheld		$75,000
	Federal Unemployment tax (550000*0.6%)		$3,300
	State Unemployment tax (600000*5.4%)		$32,400
	(To Record the employer's payroll tax expense)
D.	FICA Taxes Withheld ($75000*2)	$150,000
	Health insurance Premium With Held	$16,000
	Federal income Tax Withheld	$190,000
	Union Dues Withheld	$12,000
	State Unemployment tax	$32,400
	Federal Unemployment tax	$3,300
	Cash		$403,700
	To Record Payment of Payroll's Liabilities