During January, Luxury Cruise Lines incurs employee salaries of $1.5 million. Wi

Question

During January, Luxury Cruise Lines incurs employee salaries of $1.5 million. Withholdings in January are $114,750 for the employee portion of FICA, $225,000 for federal income tax, $93,750 for state income tax, and $15,000 for the employee portion of health insurance (payable to Blue Cross/Blue Shield). The company incurs an additional $93,000 for federal and state unemployment tax and $45,000 for the employer portion of health insurance.

1. Record the employee salary expense, withholdings, and salaries payable.

2.

Record the employee salary expense, withholdings, and salaries payable.

Record the employer-provided fringe benefits.

Explanation / Answer

Journal entries to record salary expense:

1)

Debit Salary Expenses $1,500,000

Credit FICA Taxes Payable $114,750

Credit Federal Income Tax Payable $225,000

Credit State Income Tax Paybale $93,750

Credit Employee Health Insurance $15,000

Credit Cash $1,051,500

2.

Debit Payroll Tax Expense $252750

Credit FICA Tax Payable $114750

Credit federal and state unemployment tax payable $93000

Credit Employee Health Insurance -employer share $45000

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