Question

According to a summary of the payroll of Sinclair Company, $505,000 was subject to the 6.0% social security tax and $545,000 was subject to the 1.5% Medicare tax. Also, $10,000 was subject to state and federal unemployment taxes. Required: 1. Calculate the employer's payroll taxes using the following rates: State unemployment, 4.2%; Federal unemployment, 0.8%. $ 2. Journalize the entry to record the accrual of the employer's payroll taxes. If an amount box does not require an entry, leave it blank.

Answer 1

Answer:

Explanation:

1. The computation is shown below:

State unemployment = $10,000 × 4.2% = $420

Federal unemployment = $10,000 × 0.8% = $80

2. The journal entry is shown below:

Payroll tax expense A/c Dr $38,975

        To Social security tax A/c $30,300    ($505,000 × 6.0%)

        To Medicate tax A/c $8,175    ($545,000 × 1.5%)

        To  State Unemployment tax payable A/c $420

       To  Federal Unemployment tax payable A/c $80

(Being the payroll tax expense is recorded)