Go Systems had the following payroll data for wages for the week ended February

Question

Go Systems had the following payroll data for wages for the week ended February 5. The state income tax is assumed to be 20% of the federal income tax. Write the general journal entry to record the payroll. Write the general journal entry to record the employer's payroll taxes. Assume rates of 0.6 percent for federal unemployment tax and 5.4 percent for state unemployment tax based on the first $7,000 for each employee. Also assume that no employee has earned more than $7,000. Round answers to two decimal places.

Explanation / Answer

Part A)

The amounts that will be withheld from the gross earnings will get reported as liabilities. The total amount of gross earnings will be debited to salaries expense and all the relevant liabilties will be recorded as credit entries with the difference (balance) being paid as cash.

The journal entry is given below:

___________

Part B)

The employer's payroll tax entry would involve adjustment for taxes to be paid by the employer. There would be an adjustment for FICA taxes payable of the same amount as federal income taxes payable. There would be credit entries for state unemployment and federal unemployment taxes payable. The total value of these taxes will be debited to payroll tax expense.

The journal entry is given below:

Date Account Titles Debit Credit February 5 Salaries Expense 6,770 Social Security Taxes Payable 419.74 Medicare Taxes Payable 98.17 Federal Income Taxes Payable 1,015 State Income Taxes Payable 203 Cash 5,034.09

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