the amount of net pay is $40,375, The amounted reported as the total payroll costs is $2,875
Explanation:
The Journal entries for the wages expense is mentioned below
Wages expense A/c.........................Dr $50,000
Income Tax Payable A/c................Cr $7,000
FICA taxes payable A/c...................Cr $2,625
Cash A/c...............................................Cr $40,375
We know that ,
<u>Cash = Wage expense - Income tax payable - FICA taxes payable</u>
= $50,000 - $7,000 - $2,625
= $40,375
<u>Thus , the amount of net pay is $40,375</u>
The Journal entry for the payroll expenses is mentioned below
Payroll tax expense A/c............................Dr $2,875
FICA taxes payable A/c............................Cr $2,625
Unemployment taxes payable A/c.........Cr $250
<u></u>
<u> The total payroll costs $2,875</u>
