Question

During January, Luxury Cruise Lines incurs employee salaries of $2.1 million. Withholdings in January are $160,650 for the employee portion of FICA, $315,000 for federal income tax, $131,250 for state income tax, and $21,000 for the employee portion of health insurance (payable to Blue Cross Blue Shield). The company incurs an additional $130,200 for federal and state unemployment tax and $63,000 for the employer portion of health insurance.
a. Record the employee salary expense, withholdings, and salaries payable.
b. Record the employer-provided fringe benefits.
c. record the employer payroll taxes.

Answer 1

Answer:

a. The journal entries for the employee salary expense, withholdings, and salaries payable are the following:

                                                       Debit                           Credit

Salaries expenses account    $2,100,000

    Federal Income tax payable                                       $315,000

    State income tax payable                                           $131,250

   FICA social security tax payable                                 $160,650

   Blue shield payable                                                       $21,000

  Cash account                                                               $1.472.1000

b. The journal entries for the employer-provided fringe benefits is the following:

                                                                           Debit                           Credit

Salaries expenses (Fringe benefit account)    $63,000

    Blue shield payable                                                                      $63,000

c. The journal entries for the employer payroll taxes is the following:

                                                       Debit                           Credit

Payroll Tax expense account    $290,850

    FICA Social security tax payable                                   $160,650

    Unemployment tax payable                                          $130,200

Explanation:

a. The journal entries for the employee salary expense, withholdings, and salaries payable are the following:

                                                       Debit                           Credit

Salaries expenses account    $2,100,000

    Federal Income tax payable                                       $315,000

    State income tax payable                                           $131,250

   FICA social security tax payable                                 $160,650

   Blue shield payable                                                       $21,000

  Cash account                                                               $1.472.1000

b. The journal entries for the employer-provided fringe benefits is the following:

                                                                           Debit                           Credit

Salaries expenses (Fringe benefit account)    $63,000

    Blue shield payable                                                                      $63,000

c. The journal entries for the employer payroll taxes is the following:

                                                       Debit                           Credit

Payroll Tax expense account    $290,850

    FICA Social security tax payable                                   $160,650

    Unemployment tax payable                                          $130,200