Question

According to a payroll register summary of Frederickson Company, the amount of employees’ gross pay in December was $850,000, of which $80,000 was not subject to Social Security taxes of 6.2% and $750,000 was not subject to state and federal unemployment taxes.

Determine the employer’s payroll tax expense for the month, using the following rates: FICA 7.65%, state unemployment 5.4%, and federal unemployment 0.8%.

PAYROLL TAX EXPENSE: $

Prepare the journal entry to record December payroll tax expense.

ACCOUNT TITLE AND EXPLANATION	DEBIT	CREDIT
payroll tax expense
FICA taxes payable
state unemployment taxes payable
federal unemployment taxes payable

Answer 1

FICA taxes payable	60065		=(850000-80000)*7.65%+(80000*1.45%)
State unemployment taxes payable	5400		=(850000-750000)*5.4%
Federal unemployment taxes payable	800		=(850000-750000)*0.8%
Payroll tax expense	66265
ACCOUNT TITLE AND EXPLANATION	Debit	Credit
Payroll tax expense	66265
FICA taxes payable		60065
State unemployment taxes payable		5400
Federal unemployment taxes payable		800