Reference no: EM132318531

Question

Total payroll was $444,000, of which $100,000 is exempt from Social Security tax because it represented amounts paid in excess of $118,500 to certain employees.

The amount paid to employees in excess of $7,000 was $404,000. Income taxes in the amount of $87,100 were withheld, as was $9,500 in union dues.

The state unemployment tax is 3.5%, but Ayayai 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 Ayayai makes more than $125,000. 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.

Amount Titles and Explanation               Debit/Credit

Salaries and Wages Expense                    444,000

FIGS. Taxes Payable                               26,316

Union Dues Payable                                 9,500

Withholding Taxes Payable                        87,100

Cash                                                     321,084

(To record waga and salaris paid) 

Payroll Tax Expense

FICA Taxes Payable

FUTA Taxes Payable

SUTA Taxes Payable