Francisco Company has 20 employees, each of whom earns $2,900 per month and is p
ID: 2571170 • Letter: F
Question
Francisco Company has 20 employees, each of whom earns $2,900 per month and is paid on the last day of each month. All 20 have been employed continuously at this amount since January 1. On March 1, the following accounts and balances exist in its general ledger: a. FICA-Social Security Taxes Payable, $7,192; FICA-Medicare Taxes Payable, $1,682. (The balances of these accounts represent total liabilities for both the employer's and employees' FICA taxes for the February payroll only.) b. Employees' Federal Income Taxes Payable, $14,500 (liability for February only). c. Federal Unemployment Taxes Payable, $696 (liability for January and February together). d. State Unemployment Taxes Payable, $4,640 (liability for January and February together) During March and April, the company had the following payroll transactions. Mar. 15 Issued check payable to Swift Bank, a federal depository bank authorized to accept employers' payments of FICA taxes and employee income tax withholdings. The $23,374 check is in payment of the February FICA and employee income taxes 31 Recorded the jounal entry for the March salaries payable. Then recorded the cash payment of the March payroll (the company issued checks payable to each employee in payment of the March payroll). The payroll register shows the following summary totals for the March pay period Salaries Federal Income Taxes Shop Office Salaries Salaries Pay $23,200 S 34,800 $58,000 3,596 $ 14,500 $ 39,063 Gross FICA Taxes* Pay $ 841 FICA taxes are Social Security and Medicare, respectively 31 Recorded the employer's payroll taxes resulting from the March payroll. The company has a merit rating that reduces its state unemployment tax rate to 4.00% of the first $7,000 paid each employee. The federal rate is 0.60% Apr. 15 Issued check to Swift Bank in payment of the March FICA and employee income taxes 15 Issued check to the State Tax Commission for the January, February, and March state 30 Issued check payable to Swift Bank in payment of the employer's FUTA taxes for the first quarter 30 Mailed Form 941 to the IRS, reporting the FICA taxes and the employees' federal income tax unemployment taxes. Mailed the check and the first-quarter tax return to the Commission. of the year withholdings for the first quarter Required: Prepare journal entries to record the transactions and events for both March and April. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the cash payment of FICA (employees' and employer's) and employee income taxes of the month of February Note: Enter debits before credits. Date General Journal Debit Credit Mar 15Explanation / Answer
Journal Entry for March & April
Mar 15
Social security tax withholdings payable - Debit $7,192
Medicare tax withholdings payable- Debit $1,682
Federal Income tax payable - Debit $14,500
To Cash - Credit $23,374
(Being FICA taxes and income tax paid for February)
Mar 31
Salary expense - Office - Debit $23,200
Salary expense - Shop -Debit $34,800
To Salary deductions account - Credit $18,937
(taxes deductions)
To Net Salary payable - Credit $39,063
(Being salary march month Payroll entries recorded)
Mar 31
Salary deductions account - Debit $18,937
Payroll tax expense - Debit $2,668
To Social security tax withholdings payable - Credit $3,596
($58,000*6.2%)
To Medicare tax withholdings - Credit $841
($58,000*1.45%)
To Federal Income tax payable - Credit $14,500
To State Unemployment tax payable - Credit $2,320
($58,000*4%
To Federal Unemployment payable - Credit $348
($58,000*.06%)
(Being payroll taxes recorded for march month)
Apr 15
Social security tax withholdings payable -Debit $3,596
Medicare tax withholdings - Debit $841
Federal Income tax payable - Debit $14,500
To Cash - Credit $18,937
(Being payment made towards FICA taxes and Income tax on employee salary for march)
Apr 15
State Unemployment tax payable -Debit $6,960
To Cash - Credit $6,960
(Being payment of state unemployment taxes for January, February and March paid to State Tax commission)
Apr 30
Federal Unemployment payable - Debit $1,044
To Cash - Credit $1,044
(Being payment of FUTA taxes for January, February and March paid for first quarter)
Apr 30
No journal entry required for mailing Form 941 to IRS
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