15. Airline Temporary Services (ATS) pays employees monthly. Payroll information

Question

15.

Airline Temporary Services (ATS) pays employees monthly. Payroll information is listed below for January, the first month of ATS’s fiscal year. Assume that none of the employees exceeds the federal unemployment tax maximum salary of $7,000 in January.

  

  

Required:

Record salaries expense and payroll tax expense for the January pay period. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Journal entry worksheet

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

-Record the employer payroll tax expense.

Salaries expense $580,000       Federal and state income tax withheld 116,000       Federal unemployment tax rate 0.8 %   State unemployment tax rate (after FUTA deduction) 5.4 %   Social security (FICA) tax rate 7.65 %

Explanation / Answer

DATE

JOURNAL ENTRY

DEBIT

CREDIT

January 1

Salaries Expense

$580,000    

Employee Income Tax Payable

116,000    

FICA Tax Payable

  44370

Salaries Payable

419630

Explanation

FICA tax payable = Salaries Expense*Tax Rate = 580000 * 7.65 % = 44370

DATE

JOURNAL ENTRY

DEBIT

CREDIT

January 1

Employer Payroll Tax Expense

80330

State Unemployment Payable

31320

Federal Unemployment Payable

4640

FICA Tax Payable

  44370

Explanation

Federal Unemployment Payable= $580,000 * 0.8% = 4640

State Unemployment Payable = $580,000 * 5.4% = 31320

DATE

JOURNAL ENTRY

DEBIT

CREDIT

January 1

Salaries Expense

$580,000    

Employee Income Tax Payable

116,000    

FICA Tax Payable

  44370

Salaries Payable

419630

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