Question

According to a summary of the payroll of Mountain Streaming Co., $110,000 was subject to the 6.0% social security tax and the 1.5% Medicare tax. Also, $25,000 was subject to state and federal unemployment taxes. a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.8%. $ b. Journalize the entry to record the accrual of payroll taxes. If an amount box does not require an entry, leave it blank.

Answer 1

Answer:

a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.8%.

• $9,800

b. Journalize the entry to record the accrual of payroll taxes. If an amount box does not require an entry, leave it blank.

• Dr FICA Social Security expense 6,600
• Dr FICA Medicare expense 1,650
• Dr Federal unemployment tax expense 200
• Dr State unemployment tax expense 1,350
•     Cr FICA Social Security payable 6,600
•     Cr FICA Medicare payable 1,650
•     Cr Federal unemployment tax payable 200
•     Cr State unemployment tax payable 1,350

Explanation:

payroll taxes should be:

social security $110,000 x 6% = $6,600

Medicare $110,000 x 1.5% = $1,650

federal unemployment $25,000 x 0.8% = $200

state unemployment $25,000 x 5.4% = $1,350

total = $9,800

Both employees and employers must pay equal amounts of FICA taxes (social security and medicare), but only employees pay unemployment taxes.