Question

Emily Turnbull, president of Aerobic Equipment Corporation, is concerned about her employees' well-being. The company offers its employees free medical, dental, and life insurance coverage. It also matches employee contributions to a voluntary retirement plan up to 5% of their salaries. Assume that no employee's cumulative wages exceed the relevant wage bases. Payroll information for the biweekly payroll period ending January 24 is listed below.
Wages and salaries $2,300,000
Employee contribution to voluntary retirement plan 115,000
Medical insurance premiums paid by employer 46,000
Dental insurance premiums paid by employer 16,100
Life insurance premiums paid by employer 8,050
Federal and state income tax withheld 494,500
FICA tax rate 7.65%
Federal and state unemployment tax rate 6.20%

1. Record the employee salary expense, withholdings, and salaries payable (or say No journal entry required.)

2. Record the employer-provided fringe benefits (or say No journal entry required.)

3. Record the employer payroll taxes (or say No journal entry required.)

Answer 1

Answer:

SEE EXPLANATION

Explanation:

Given the following;

Wages and salaries = $2,300,000

Employee contribution to voluntary retirement plan = $115,000

Medical insurance premiums paid by employer = $46,000

Dental insurance premiums paid by employer = $16,100

Life insurance premiums paid by employer = $8,050

Federal and state income tax withheld = $494,500

FICA tax rate = 7.65%

Federal and state unemployment tax rate = 6.20%

1.)

Salaries and Wages = $2,300,000

FICA taxes payable = 0.0765 * 2300000 = ($175,950)

Income tax withheld = ($494,500)

Employee contribution to voluntary retirement plan = ($115,000)

Salaries payable = $2300000 - $(175950 + 494500 + 115000) = $1,514,550

B.) BENEFITS

Accounts payable (Retirement plan) = $115,000

Life Insurance premium = $8,050

Medical insurance premium = $46,000

Dental insurance premium = $16,100

TOTAL BENEFIT = $(115,000 + 8050+46000+16100) = $185,150

C.) PAYROLL TAXES:

Unemployment tax payable $2,300,000 x 6.20% = $142,600

FICA tax payable 7.65% * $2,300,000 = $175,950

PAYROLL tax = $(175,950+142,600) = $318,550