Electronics Service Co. pays salaries monthly on the last day of the month. The

Question

Electronics Service Co. pays salaries monthly on the last day of the month. The following information is available from Electronics for the month ended December 31, 2016 Administrative salaries Sales salaries Office salaries $79,000 69,000 50,000 Assume the Social Security tax rate is 6.2 percent on the first $110,000 of salaries and the Medicare tax rate is 1.5 percent on all salaries. Duke reached the $110,000 amount in September. His salary in December amounted to $13,000 and is included in the $79,000. No one else will reach the $110,000 amount for the year. None of the employee salaries are subject to unemployment tax in December. Other amounts withheld from salaries in December were as follows: Federal income tax State income tax Employee savings plan $17,000 6,600 2,900

Explanation / Answer

Note: (This is an additional entry for E'r contribution to Social security)

b- No Entry required for Payroll Tax Expenses.

Date General Journal Debit Credit 31-Dec-16 Salary    198,000.00 To E'e Social Security Tax Payable      11,470.00 To Medicare Tax Payable        2,970.00 To Federal Income Tax Payable      17,000.00 To State Income Tax payable        6,600.00 To Employee Savings Plan Payable        2,900.00 To Salary Payable    157,060.00 31-Dec-16 E'e Social Security      11,470.00 To E'e Social Security Tax Payable      11,470.00

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