Question

Caribbean Tours’ total payroll for the month of January was $600,000. The following withholdings, fringe benefits, and payroll taxes apply:Federal and state income tax withheld $60,000Health insurance premium paid by employer (Bluecross) 10,800Contribution to retirement plan paid by employer (Fidelity) 24,000FICA tax rate (Social Security and Medicare) 7.65%Federal and state unemployment tax rate 6.20%Assume that none of the withholdings or payroll taxes has been paid by the end of January (record them as payables), and no employees’ cumulative wages exceed the relevant wage bases.1. Record the employee salary expense, withholdings, and salaries payable.2. Record the employer-provided fringe benefits.3. Record the employer payroll taxes.

Answer 1

Answer:

wages expense  600,000 debit

      FICA taxes payables                              45,900 credit

      Federal and state income tax payable 60,000 credit

      Wages payable                                     494,100 credit

--to record employees salaries and  witholdings--

payroll tax expense          83,100 debit

Frindge benefit expense 34,800 debit

               FICA taxes payables                   45,900 credit

               FUTA&SUTA tax payables         37,200 credit

               Health insurance payable           10,800 credit

               Retirement fund obligation         24,000 credit

Explanation:

taxes:

FICA is paid by both, employee and employer. While FUTA&SUTA only by the employer

FICA 600,000 x 7.65% = 45,900

FUTA&SUTA 600,000 x 6.20% = 37,200

fringe benefit:

as they are done by the employer it will create liabilities and obligation