According to a summary of the payroll of PJW Co., $380,500 in earnings were subject to the 7.5% FICA tax. Also, $38,050 in earnings were subject to state and federal unemployment taxes. Round your answers to the nearest cent. a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 4.5%; federal unemployment, 1.1%. b. Illustrate the effects on the accounts and financial statements of recording the accrual of payroll taxes. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.
According to a summary of the payroll of PJW Co., $380,500 in earnings were subject to the 7.5% FICA tax. Also, $38,050 in earnings were subject to state and federal unemployment taxes. Round your answers to the nearest cent. a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 4.5%; federal unemployment, 1.1%. b. Illustrate the effects on the accounts and financial statements of recording the accrual of payroll taxes. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:According to a summary of the payroll of PJW Co., $380,500 in earnings were subject to the 7.5% FICA tax. Also, $38,050 in earnings were subject to state and
federal unemployment taxes.
Round your answers to the nearest cent.
a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 4.5%; federal unemployment, 1.1%.
b. Illustrate the effects on the accounts and financial statements of recording the accrual of payroll taxes. If no account or activity is affected, select "No
effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative
amounts.
<Financial Statement Effects
Balance Sheet
Assets
Liabilities
No effect
No effect
= FICA tax payable
+ SUTA payable
+
FUTA payable
Statement of Cash Flows
No effect
Payroll tax expense
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