Total payroll was $960,000, of which $220,000 is exempt from Social Security tax because it represented amounts paid in excess of $118,500 to certain employees.Assume that the current F.I.C.A. tax (Social Security 6.2% and Medicare 1.45%) is 7.65% on an employee’s wages to $118,500 (Social Security ceiling) and 1.45% in excess of $118,500 (Medicare no ceiling).Income taxes in the amount of $180,000 were withheld, as was $18,000 in union dues.The amount paid to employees in excess of $7,000 (ceiling for FUTA and SUTA) was $800,000.The state unemployment tax is 3.5%, but Grich Company is allowed a credit of 2.3% by the state for its unemployment experience.The federal unemployment tax rate is 0.8% after state credit. InstructionsPrepare the journal entry for the salaries and wages paid.Prepare the journal entry to record the employer payroll taxes.

Payroll taxes include FUTA, SUTA, FICA and social security taxes. FUTA refers to Federal…

Answered: Total payroll was $960,000, of which…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Total payroll was $960,000, of which $220,000 is exempt from Social Security tax because it represented amounts paid in excess of $118,500 to certain employees.

Assume that the current F.I.C.A. tax (Social Security 6.2% and Medicare 1.45%) is 7.65% on an employee’s wages to $118,500 (Social Security ceiling) and 1.45% in excess of $118,500 (Medicare no ceiling).
Income taxes in the amount of $180,000 were withheld, as was $18,000 in union dues.
The amount paid to employees in excess of $7,000 (ceiling for FUTA and SUTA) was $800,000.
The state unemployment tax is 3.5%, but Grich Company is allowed a credit of 2.3% by the state for its unemployment experience.
The federal unemployment tax rate is 0.8% after state credit.

Instructions

Prepare the journal entry for the salaries and wages paid.
Prepare the journal entry to record the employer payroll taxes.

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