Answer and Explanation:
According to the scenario, computation of the given data are as follow:-
Journal Entry
a).Wages and salaries expenses A/c Dr. $462,000
To withhold tax payable A/c $74400
To FICA taxes payable A/c $28,647
To union dues payable A/c $9600
To cash A/c $349,353
(Being the wages and salaries paid)
b.
Payroll tax expense A/c Dr.
To FICA tax payable Cr. $28,647
To federal unemployment tax payable Cr. $672
To State unemployment tax payable Cr. $1008
(Being the payroll expense is recorded)
(($462,000-$378,000) ×0.8% = $672)
($462,000-$378,000 = $84,000)
($84,000× (3.5% - 2.3%) = $1008)
Working notes:
Calculation of FICA Tax = (Total Payroll - Exempted Tax) × Current FICA Tax Rate
=
($462,000 - $108,000) × 7.65%
= $354,000 × 7.65%
= $27,081
= Exempted Tax × Excess Rate of Employee Wages
= $108,000 × 1.45%
= $1,566
Total FICA Tax Payable Amount
= $27,081 + $1,566
= $28,647
