Question

Urban Window Company had gross wages of $309,000 during the week ended July 15. The amount of wages subject to social security tax was $278,100, while the amount of wages subject to federal and state unemployment taxes was $39,000. Tax rates are as follows:
Social security 6.0%
Medicare 1.5%
State unemployment 5.4%
Federal unemployment 0.6%

The total amount withheld from employee wages for federal taxes was $61,800.

Required:
a. Journalize the entry to record the payroll for the week of July 15.
b. Journalize the entry to record the payroll tax expense incurred for the week of July 15.

Answer 1

Answer:

a. Debit Wages expense for $309,000; Credit Social Security tax payable ($278,100 * 6%) for $16,686; Credit Medicare tax payable ($278,100 * 1.5%) for $4,172; Credit Employees federal Income tax payable for $61,800; and Credit Wages payable for $226,343.

b. Debit Payroll tax expense for $23,198; Credit Social Security tax payable ($278,100 * 6%) for $16,686; Credit Medicare tax payable ($278,100 * 1.5%)  for $4,172; Credit State Unemployment tax payable ($39,000 * 5.4%) for $2,106; and Credit Federal Unemployment tax payable ($39,000 * 0.6%) for $234.

Explanation:

a. Journalize the entry to record the payroll for the week of July 15.

Note: See the the part a of the attached excel file for the journal entries.

In the attached excel file, we have:

Wages payable = Wages expense - Social Security tax payable - Medicare tax payable - Employees federal Income tax payable = $309,000 - $16,686 - $4,172 - $61,800 = $226,343

b. Journalize the entry to record the payroll tax expense incurred for the week of July 15

Note: See the the part b of the attached excel file for the journal entries.

In the attached excel file, we have:

Payroll tax expense = Social Security tax payable + Medicare tax payable + State Unemployment tax payable + Federal Unemployment tax payable = $16,686 + $4,172 + $2,106 + $234 = $23,198

Download xlsx