Vacation Destinations offers its employees the option of contributing up to 5% o

Question

Vacation Destinations offers its employees the option of contributing up to 5% of their salaries to a voluntary retirement plan, with the employer matching their contribution. The company also pays 100% of medical and life insurance premiums. Assume that no employee's cumulative wages exceed the relevant wage bases. Payroll information for the first biweekly payroll period ending February 14 is listed below Wages and salaries Employee contribution to voluntary retirement plan Medical insurance premiums paid by employer Life insurance premiums paid by employer Federal and state income tax withheld Social Security tax rate Medicare tax rate Federal and state unemploymen $800,000 33,600 16,800 3,200 200,000 6.20 % 1.45 % 6.20 % t tax rate Required 1. Record the employee salary expense, withholdings, and salaries payable 2. Record the employer-provided fringe benefits 3. Record the employer payroll taxes Record the necessary entry for the scenarios given above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Explanation / Answer

Journal Entry S. No. Date Particulars Dr. Amt. Cr. Amt. 1 14-Feb Wages & Salaries Expense    800,000.00     Accounts Payable (Retirement Plan)       33,600.00     Federal & State Income Tax Payable    200,000.00     Social Security Tax Payable       49,600.00 $800,000 X 6.20%     Medicare Tax Payable       11,600.00 $800,000 X 1.45%     Wages & Salaries Payable    505,200.00 (To record the salaries & wages expenses) 2 14-Feb Wages & Salaries Expense      53,600.00     Accounts Payable (Retirement Plan)       33,600.00     Medical Insurance Payable       16,800.00     Life Insurance Payable         3,200.00 (To record the fringe benefits) 3 14-Feb Payroll Taxes                                                                 110,800.00     Social Security Tax Payable       49,600.00 $800,000 X 6.20%     Medicare Tax Payable       11,600.00 $800,000 X 1.45%     Federal & Unemployment Tax Payble       49,600.00 $800,000 X 6.20% (To record the employer payroll tax expense)

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