The payroll of YellowCard Company for September 2013 is as follows. Total payrol
ID: 2477708 • Letter: T
Question
The payroll of YellowCard Company for September 2013 is as follows.
Total payroll was $474,200, of which $142,500 is exempt from Social Security tax because it represented amounts paid in excess of $106,800 to certain employees. The amount paid to employees in excess of $7,000 was $395,400. Income taxes in the amount of $83,600 were withheld, as was $8,580 in union dues. The state unemployment tax is 3.5%, but YellowCard Company is allowed a credit of 2.3% by the state for its unemployment experience. Also, assume that the current FICA tax is 7.65% on an employee’s wages to $106,800 and 1.45% in excess of $106,800. No employee for YellowCard makes more than $125,000. The federal unemployment tax rate is 0.8% after state credit.
Prepare the necessary journal entries if (a) the wages and salaries paid and (b) the employer payroll taxes are recorded separately. (Round answers to 0 decimal places, e.g. 5,250. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts .Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No.
Account Titles and Explanation
Debit
Credit
(a)
(b)
Explanation / Answer
Answer:
Date
Particulars
Debit
Credit
A
Salary and wages expense
474,200
Withholding Taxes Payable
83,600
FICA Taxes payable (+)
27,441
Union due payable
8,580
Cash
354,879
B
Payroll tax expense
31,760
FICA Taxes payable (+)
30,185
FUTA Taxes payable (*)
630
SUTA Taxes payable (*)
945
(+) FICA tax = [( 474,200-142,500 )*0.0765]+[( 142,500 )*0.0145]
= 25375.05+2066.25
= 27441.30
(*) FUTA Taxes payable = (474,200-395,400) *0.8%
= 630
SUTA Taxes payable = (474,200-395,400) *(3.5-2.3)%
= 945
Date
Particulars
Debit
Credit
A
Salary and wages expense
474,200
Withholding Taxes Payable
83,600
FICA Taxes payable (+)
27,441
Union due payable
8,580
Cash
354,879
B
Payroll tax expense
31,760
FICA Taxes payable (+)
30,185
FUTA Taxes payable (*)
630
SUTA Taxes payable (*)
945
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