Answer:
A. Dr Salaries & Wages exp. $1,840,000
Dr Fed tax withheld & payable $450,000
Cr FICA Taxes withheld & payable $120,920
Cr Cash $2,169,080
B. Dr Employer's Tax expenses $112,920
Cr FICA taxes payable $120,920
Cr SUTA payable $4,800
Cr FUTA payable $3,200
Explanation:
a. Preparation of the journal entry for the salaries and wages paid.
Dr Salaries & Wages exp. $1,840,000
Dr Fed tax withheld & payable $450,000
Cr FICA Taxes withheld & payable $120,920
[($1,840,000-$320,000*7.65%)+($320,000*1.45%)]
Cr Cash $2,169,080
($1,840,000+$450,000-$120,920)
(Being net salaries and wages paid after holding taxes)
b. Preparation of the entry to record the employer payroll taxes.
Dr Employer's Tax expenses $112,920
($120,920-$4,800 -$3,200)
Cr FICA taxes payable $120,920
[($1,840,000-$320,000*7.65%)+($320,000*1.45%)]
Cr SUTA payable $4,800
($1,840,000-$1,440,000*1.2%)
Cr FUTA payable $3,200
($1,840,000-$1,440,000*.8%)
(Being employer's taxes made payable towards salaries & wages)
