During January 2021, ABC Inc. incurs employee salaries of $3,000,000. Federal income tax withholding was $450,000, State income tax was $187,500, and $30,000 for the employee portion of health insurance (payable to Blue Cross). The employer portion for Health Care was $90,000. 1. Record the employee salary expense, withholdings including FICA (Emplyees' responsibility: Social Security 6.2% and Medicare 1.45% of the gross pay), and salaries payable for January 2021 2. Record the employer-provided fringe benefits. 3. Record the employer payroll taxes (Emplyers' responsibility: Social Security 6.2% and Medicare 1.45% of the gross pay) (assuming no employee passed the $7000 income limit on this first month of January for FUTA 0.6% and SUTA 5.4% combined 6% of the first $7000 annual income)
During January 2021, ABC Inc. incurs employee salaries of $3,000,000. Federal income tax withholding was $450,000, State income tax was $187,500, and $30,000 for the employee portion of health insurance (payable to Blue Cross). The employer portion for Health Care was $90,000. 1. Record the employee salary expense, withholdings including FICA (Emplyees' responsibility: Social Security 6.2% and Medicare 1.45% of the gross pay), and salaries payable for January 2021 2. Record the employer-provided fringe benefits. 3. Record the employer payroll taxes (Emplyers' responsibility: Social Security 6.2% and Medicare 1.45% of the gross pay) (assuming no employee passed the $7000 income limit on this first month of January for FUTA 0.6% and SUTA 5.4% combined 6% of the first $7000 annual income)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:During January 2021, ABC Inc. incurs employee salaries
of $3,000,000. Federal income tax withholding was
$450,000, State income tax was $187,500, and $30,000
for the employee portion of health insurance (payable to
Blue Cross). The employer portion for Health Care was
$90,000.
1. Record the employee salary expense, withholdings
including FICA (Emplyees' responsibility: Social
Security 6.2% and Medicare 1.45% of the gross
pay), and salaries payable for January 2021
2. Record the employer-provided fringe benefits.
3. Record the employer payroll taxes (Emplyers'
responsibility: Social Security 6.2% and Medicare
1.45% of the gross pay) (assuming no employee
passed the $7000 income limit on this first month
of January for FUTA 0.6% and SUTA 5.4%
combined 6% of the first $7000 annual income)
When ready, after preparing Journal Entries on paper,
answer the following questions.
Expert Solution
Step 1
Journal entries are the record of events or transactions in any business be it related to any sale or purchase, any investment made or amount borrowed, or any expense incurred or income earned, etc. These balances are then adjusted against their respective accounts and make it easy for accountants to prepare final accounts and for users to understand the effect of each account's value or transaction.
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