Question

Merger Co. has 10 employees, each of whom earns $2,000 per month and has been employed since January 1. FICA Social Security taxes are 6.2% of the first $128,400 paid to each employee. and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee.
Required:
Prepare the March 31 journal entry to record the March payroll taxes expenses.

Answer 1

Answer: Please see answer in explanation column

Explanation:

Journal To record the employer's payroll taxes Expense on March 31st by Merger Co.

Date Account Titles and Explanations Debit             Credit

Mar. 31 Payroll Tax Expenses                 $2,730  

   

FICA - Social Security Taxes Payable                                        $1,240

 FICA - Medicare Taxes  Payable                                                $290

  Federal Unemployment Taxes Payable                                    $120

  State Unemployment Taxes Payable                                         $1,080

Calculation:

  FICA - Social Security Taxes Payable= 6.2 %  x 2000 x 10 employees

= $1,240

 FICA - Medicare Taxes Payable=1.45% x 2000 x 10 employees

=$290

 Federal Unemployment Taxes Payable=0.6% x 2000 x 10 employees

=$120

State Unemployment Taxes Payable=5.4% x 2000 x 10 employees

=$1.080

Payroll Tax Expenses= FICA - Social Security Taxes Payable +  FICA - Medicare Taxes payable + Federal Unemployment Taxes payable +State Unemployment Taxes=  $1,240 + $290 + $120 + $1,080 =$2,730