Reference no: EM132791585
For the year ended December 31, 2020, Denkinger Electrical Repair Company reports the following summary payroll data.
Gross earnings:
Administrative salaries $200,000
Electricians' wages370,000
Total$570,000
Deductions:
FICA taxes$38,645
Federal income taxes withheld174,400
State income taxes withheld (3%)17,100
United Fund contributions payable27,500
Health insurance premiums17,200
Total$274,845
Denkinger's payroll taxes are Social Security tax 6.2%, Medicare tax 1.45%, state unemployment 2.5% (due to a stable employment record), and 0.8% federal unemployment. Gross earnings subject to Social Security taxes of 6.2% total $490,000, and gross earnings subject to unemployment taxes total $135,000. No employee exceeds the $127,200 limit related to FICA taxes.
Problem 1: Prepare a summary journal entry at December 31 for the full year's payroll.
Problem 2: Journalize the adjusting entry at December 31 to record the employer's payroll taxes.