I am so confused on what goes where why and the numbers help QUESTION 10 Not com

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I am so confused on what goes where why and the numbers help

QUESTION 10 Not complete Points out of 3.50 PFlag question Recording Payroll and Payroll Taxes Manchester, Inc., had the following payroll for March: Officers' salaries Sales salaries Federal income taxes withheld FICA taxes withheld Health insurance premiums withheld Salaries (included above) subject to federal unemployment taxes Salaries (included above) subject to state unemployment taxes $39,000 70,000 21,000 7,900 2,500 65,000 75,000 Required Prepare journal entries on March 31 to record a. Accrual of the monthly payroll b. Payment of the net payroll. C.Accrual of employer's payroll taxes. (Assume that the FICA tax matches the amount withheld, the federal unemployment tax is 0.6 percent, and the state unemployment tax is 5.4 percent.) d. Payment of all liabilities related to this payroll. (Assume that all are settled at the same time.)

Explanation / Answer

Solution - Journal entries in the books of Manchester Inc.

(a) March 31

State unemployment tax payable

($75000 * 5.4%)

Date Particulars Debit Credit

(a) March 31

Office salary expenses $39000 Sales salary expenses $70000 Federal Income tax withheld $21000 FICA tax withheld $7900 Health insurance premium withheld $2500 Payroll payable (Balance) $77600 (Accrual payable for march) (b) March 31 Payroll payable $77600 Cash $77600 (to pay accrual payable) (c) March 31 Payroll tax expenses $12340 FICA tax payable $7900 Federal Unemployment tax payable ($65000 * 0.6%) $390

State unemployment tax payable

($75000 * 5.4%)

$4050 (Recording of payroll taxes and FICA tax matches the amount withheld hence $7900 payable as FICA tax) (d) March 31 Federal Income taxes withholding payable $21000 FICA tax payable $15800 Health Insurance premium payable $2500 Federal unemployment tax payable $390 State unemployment tax payable $4050 Cash $43740 (Recording of all payroll payment related liabilities)

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