Compute the amount of tax that must be paid to the Cleaners B.

Question

Bailey Dry Cleaners has six employees who were paid the following wages during 2019: Frank Johnson Frank Johnson $27,000 Bill Long 18,000 Duff Morse 130,000 Laura Stewart 28,000 Cindy Sharpe 26,000 Melissa Ledbetter 20,000 Total $249,000 The state allows the company a 1% unemployment compensation merit-rating reduction from the normal rate of 5.4%. The federal unemployment rate is 0.6%. The maximum unemployment wages per employee are $7,000 for both the state and the federal government. Income tax withholdings of 20% are applied to all employees. A F.I.C.A. tax rate of 8% on the employee and 8% on the employer is applied to the first $128,400 of each employee’s wages. Required: 1. Calculate the amount of payroll taxes to be paid by Bailey. 2. Prepare the journal entries to record the payment of payroll and the payroll tax expense.

Answer 1

Question

Chapter 9, Problem 9P

1.

To determine

Compute the amount of tax that must be paid to the Cleaners B.

2.

To determine

Prepare journal entry to record the given transaction.

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