Assume that the following tax rates and payroll information

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Reference no: EM13392901

Assume that the following tax rates and payroll information pertain to Brookhaven Publishing:

  • Social Security taxes: 4% on the first $55,000 earned per employee
  • Medicare taxes: 1.5% on the first $130,000 earned per employee
  • Federal income taxes withheld from wages: $7,500
  • State income taxes: 4% of gross earnings
  • Insurance withholdings: 1% of gross earnings
  • State unemployment taxes: 5.4% on the first $7,000 earned per employee
  • Federal unemployment taxes: 0.8% on the first $7,000 earned per employee

The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end and no wages have been paid during the month.

a. Prepare the necessary entry to record Brookhaven's February payroll. The entry will include deductions for the following:

  • Social Security taxes
  • Medicare taxes
  • Federal income taxes withheld
  • State income taxes
  • Insurance withholdings

b. Prepare the journal entry to record Brookhaven's payroll tax expense. The entry will include the following:

  • Matching Social Security taxes
  • Matching Medicare taxes
  • State unemployment taxes

Federal unemployment taxes

Reference no: EM13392901

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