On January 8, the end of the first weekly pay period of the year, Regal Company\

Question

On January 8, the end of the first weekly pay period of the year, Regal Company's payroll register showed that that its employees earned $27,760 of office salaries and $70,240 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes at the rate of 6.2%. FICA Medicare taxes at the rate of 1.45%, 13,360 of federal income taxes, $1,350 of medical insurance deductions, and $840 of union dues. No employee earned more than $7,000 in this first period.

Required
1. Calculate FICA Social Security taxes payable and FICA Medicare taxes payable. Prepare the journal entry to record Regal Company's January 8 (employee) payroll expenses and liabilities.

2. Prepare the journal entry to record Regal's (employer) payroll taxes resulting from the January 8 ppayroll. Regal's merit rating reduces its state unemployment tax rate to 5% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.8%.



*Please show all work and how you get the answers.


Thank you

Explanation / Answer

"Calculate FICA Social Security taxes payable and FICA Medicare taxes payable" FICA SS=(60,840+25,760).062=5,369.20 FICA Med=(60,840+25,760).0145=1,255.70 "Prepare the journal entry to record Regal Company’s January 8 (employee) payroll expenses and liabilities." Since this will not format right I hope you understand that DR= Debit and CR=Credit. Jan 8 Office Salaries Expense DR 25,760 Sales Salaries Expense DR 60,840 Withholding Tax Payable CR 12,960 FICA SS Tax Payable CR 5,369.20 FICA Med Tax Payable CR 1,255.70 Med Insurance Payable CR 1,390.00 Union Dues Payable CR 920.00 Cash CR 64,705.10 Prepare the journal entry to record Regal’s (employer) payroll taxes resulting from the January 8 payroll. Regal’s merit rating reduces its state unemployment tax rate to 2% of the first $7,000 paid each employee. The federal unemployment tax rate is .80%. Jan 8 Payroll tax Expense DR 9,049.70 FICA SS Tax Payable CR 5,369.20 FICA Med Tax Payable CR 1,255.70 *Federal Unemployment tax payable CR 692.80 *State Unemployment Tax Payable CR 1,732.00 FICA SS and FICA Med are a straight match to the employees portion (well except this year in real life). Since no employees have reached the first $7,000 The State unemployment and federal unemployment are calculated on the entire gross wages which is 60,840+25,760=86,600 86,600*.02=1,732 86,600*.008=692.80

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