EXERCISE 8-2 On January 14, at the end of the second week of the year, the totals of Castle Company's payroll register showed that its store employees' wages amounted to $33,482 and that its warehouse wages amounted to $13,560. Withholdings consisted of federal income taxes, $5,110, employer's Social Security taxes at the rate of 6.2 percent, and employees' Social Security taxes at a rate of 6.2 percent. Both the employer's and employees' Social Security taxes are based on the first $118,500, and no employee has reached the limit. Additional withholdings were Medicare taxes at the rate of 1.45 percent on all earnings and charitable contributions withheld, $845. a. Calculate the amount of Social Security and Medicare taxes to be withheld and prepare the general journal entry to record the payroll. Round answers to two decimal places. b. Prepare the general journal entry to record the employer's payroll taxes, assuming that the federal unemployment tax is 0.6 percent of the first $7,000, that the state unemployment tax is 5.4 percent of the same base, and that no employee has surpassed the $7,000 limit.

EXERCISE 8-2 On January 14, at the end of the second week of the year, the totals of Castle Company's payroll register showed that its store employees' wages amounted to $33,482 and that its warehouse wages amounted to $13,560. Withholdings consisted of federal income taxes, $5,110, employer's Social Security taxes at the rate of 6.2 percent, and employees' Social Security taxes at a rate of 6.2 percent. Both the employer's and employees' Social Security taxes are based on the first $118,500, and no employee has reached the limit. Additional withholdings were Medicare taxes at the rate of 1.45 percent on all earnings and charitable contributions withheld, $845. a. Calculate the amount of Social Security and Medicare taxes to be withheld and prepare the general journal entry to record the payroll. Round answers to two decimal places. b. Prepare the general journal entry to record the employer's payroll taxes, assuming that the federal unemployment tax is 0.6 percent of the first $7,000, that the state unemployment tax is 5.4 percent of the same base, and that no employee has surpassed the $7,000 limit.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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