Chapter 13, Problem 13.14E

Payroll Taxes Payable, Pay Exceeds. Wage Base. Elyctric Company reports a $2,850,000 monthly payroll. Payroll income taxes average 20% for federal and 4% for state and local taxes. The company is also responsible for federal and state unemployment taxes. The federal unemployment tax rate is 1.6%. The state unemployment tax rate is 4.4% on a wage base of $7,000, but Elyctric gets a 3.2% credit. Payroll for employees who have exceeded the $7,000 wage base was $2,140,000. Payroll for employees who have exceeded the income base for federal insurance contribution act (FICA) tax is $247,000. Payroll for employees who have exceeded the minimum amount to be subject to the additional Medicare taxes is $180,000.

Required

1. a. Prepare the journal to record the monthly payroll.
2. b. Prepare the journal entry to pay the liability for accrued salaries.
3. c. Prepare the journal entry necessary to record Elyctric payroll tax expense for the monthly payroll.