Exercise 13-6 The payroll of YellowCard Company for September 2016 is as follows

Question

Exercise 13-6 The payroll of YellowCard Company for September 2016 is as follows Total payroll was $480,000, of vhich $110,000 is exempt from Social Security tax because it represented amounts paid in excess of sin,so to certan employees. The amount paid to employees in excess of $7,000 was $400,000. Income taxes in the amount of $80,000 were withheld, as was $9,000 in union dues. The state unemployment tax is 3.5%, but Yellowcard Company is allowed a credit of 2.3% by the state for its unemployment experience. Also, assume that the current FICA tax is 7.65% on an employee's wages to $118,500 and 1.45% in excess of $118,500. No employee for Yello Card makes more than msoo The federal unemployment tax rate is 0.8% after state credit. Prepare the necessary journal entries if the wages and salaries paid and the employer payroll taxes are recorded separately. (Round answers to O decímal places, e.g.5,275. If no entry is required, select "No Entry" for the account titles and enter O for the amounts .Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit (To record wages and salaries paid)

Explanation / Answer

YellowCard Company Sep-16 Payroll journal Account Title Debit Credit Wages & salaries expense 480000 Income Tax withholding Payable 80000 FICA Taxes payable((480000-110000)*7.65%)+(110000*1.45%) 29900 Union dues payable 9000 Cash (bal.fig.) 361100 (To record wages & Salaries paid) Pay roll tax expense 31500 FICA Taxes payable((480000-110000)*7.65%)+(110000*1.45%) 29900 FUTA taxes payable(480000-400000)*0.8% 640 SUTA taxes payable(480000-400000)*(3.5%-2.3%) 960 (to record employer payroll taxes)

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