Question

According to a summary of the payroll of Scotland Company, total payroll was $500,000 and all subject to the 1.5% Medicare tax. $450,000 was subject to the 6.0% social security tax. Federal income tax withheld was $98,000. Also, $15,000 was subject to state (4.2%) and federal (0.8%) unemployment taxes.

Answer 1

	General Journal	Debit	Credit
1	Salaries Expense	$500,000
	Social Security Tax Payable		$27,000	($450,000 x 6%)
	Medicare Tax Payable		$7,500	($500,000 x 1.5%)
	Federal Income Taxes Payable		$98,000
	Salaries & Wages Payable		$367,500
2	Payroll Tax Expense	$35,250
	Social Security Tax Payable		$27,000
	Medicare Tax Payable		$7,500
	State Unemployment Tax Payable		630	($15,000 x 4.2%)
	Federal Unemployment Tax Payable		120	($15,000 x 0.8%)