Having dificulties with this one The following information about the payroll for
ID: 2487414 • Letter: H
Question
Having dificulties with this one
The following information about the payroll for the week ended July 17 was obtained from the records of Anaconda Mining Co.:
1. For the July 17 payroll, determine the employee FICA tax payable.
2. Illustrate the effect on the accounts and financial statements of paying and recording the July 17 payroll. (Assume employees were paid on July 17, but withholdings will be paid to their respective agencies later.)
If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.
Determine the following amounts for the employer payroll taxes related to the July 17 payroll: (a) FICA tax payable, (b) state unemployment tax payable, and (c) federal unemployment tax payable.
b. State unemployment tax payable:
c. Federal unemployment tax payable:
4.
Illustrate the effect on the accounts and financial statements of recording the liability for the July 17 payroll taxes.
If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.
a. FICA tax payable:b. State unemployment tax payable:
c. Federal unemployment tax payable:
4.
Illustrate the effect on the accounts and financial statements of recording the liability for the July 17 payroll taxes.
If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.
Salaries Deductions Sales salaries Office salaries Tax rates assumed: $315,000 Warehouse salaries 185,000 125,000 $625,000 Income tax withheld U.S. savings bonds Group insurance $98,000 15,000 12,500 FICA tax, 75% of employee annual earnings State unemployment (employer only), 42% Federal unemployment (employer only), 0.8%Explanation / Answer
1. Employee FICA tax payable = $625,000 * 7.5% = $46,875
2. Gross salaries or salaries expense = $625,000
FICA tax payable = $46,875
Income tax withheld = $98,000
U.S Saving bond = 15,000
Group insurance = 12,500
Cash paid = $452,625
Assets decreases by $452,625
Liabilities increases $172,375 (All deduction from employee to be paid in future)
Shareholders equity decrease by $625,000(Salaries expense in Income statement )
3. Employers share
a) FICA tax payable = $625,000 * 7.5% = $46,875
b) State unemployment tax payable = 625,000 * 4.2 % = $26,250
c) Federal unpemployement tax payable = 625,000 * .8% = $5,000
4.
Liabilities increase by 78,125 (all employers shares )
Share holders equity decrease by 78,125 ( Payroll expense in income statement )
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