APPLY THE CONCEPTS: Record payroll entries The payroll clerk at Rivera, Inc., ha

Question

APPLY THE CONCEPTS: Record payroll entries The payroll clerk at Rivera, Inc., has used a spreadsheet program to produce a printout of the salaries for May 15 Employees' total earnings Deductions from earnings Federal income tax State income tax Social Security tax Medicare tax Health insurance premiums Total deductions Net pay $90,000 $14,400 3,600 5,580 1,305 1,800 26,685 $63,315 Use the data in the spreadsheet for the following entries. If an amount box does not require an entry, leave it blank or enter "O". 1. Prepare the journal entry for the payment of the weekly salaries. The salaries will not be paid until May 20 2. Prepare the journal entry to record the employer's payroll taxes. In addition to the data for Social Security and Medicare in the table, which the employer must also pay, assume a 6.0% federal unemployment tax rate and a 5.4% state unemployment tax rate. Also assume that all wages are subject to these two taxes. Not sure about the account title? Assets Cash Notes Receivabe Accounts Receivable Allowance for Doubtful Accounts Interest Receivable Prepaid Insurance Prepaid Rent Petty Cash Supplies Office Equipment Accumulated Depreciation-Office Equipment

Explanation / Answer

1. To record the payroll for May 15 pay period Sl.No. Account Title Debit Credit 1 Salaries Expense 90000 2 Employee Fed.Income Tax payable 14400 3 State Income Tax Payable 3600 4 Social Security Tax Payable 5580 5 Medicare Tax Payable 1305 6 Health Insurance Premium Payable 1800 7 Salaries Payable 63315 (Salaries for May 15 recorded) 2. To record the payroll taxes for May 15 pay period Sl.No. Account Title Debit Credit 1 Payroll Tax Expense 90000 2 Social Security Tax Payable 5580 3 Medicare Tax Payable 1305 4 FUTA Tax Payable 5400 5 SUTATax Payable 4860 (Payroll taxes for May 15 recorded) As per the question FUTA tax is 6% and SUTA tax is 5.4%.

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