Question

Lopez Company has a single employee, who earns a salary of $192,000 per year. That employee is paid on the 15th and last day of each month. On January 15, Lopez is subject to the following payroll taxes: FICA–Social Security Taxes (at 6.2% of the first $118,500 each employee earns in the calendar year), FICA–Medicare Taxes (at 1.45%), FUTA (at 0.6% of the first $7,000 each employee earns in the calendar year), and SUTA (at 5.4% of the first $7,000 each employee earns in the calendar year). The journal entry to record the employer's payroll tax expense and related liabilities would include a debit to:

Answer 1

Answer:

Journal entries for employee salary and statutory deductions in the year.

Debit Salary Account with $181,449

Debit FICA–Social Security Taxes with $7,347

Debit FICA–Medicare Taxes with $2,784

Debit FUTA with $42

Debit SUTA with $378

Credit Cash with $181,449

Credit FICA–Social Security Taxes payable with $7,347

Credit FICA–Medicare Taxes payable with $2,784

Credit FUTA payable with $42

Credit SUTA payable with $378

Explanation:

The amount payable to the employee is the balance after taking note of all statutory deductibles.

In this question we have assumed the salary has been fully paid in the course of the year (less all deductions), however the deductions are being remitted on the 15th day of the first month in the new financial year.

Total deductible arrived at is $10,551 and the salary payable to the employee is $181,449.

Refer to the attached schedule for detailed workings