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FINANCIAL ACCOUNTING
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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Ryan Company paid salaries for the month of June amounting to $240,000. Of this amount, $60,000 was received by employees who had already been paid the $285,600 maximum amount of annual earnings taxable in one year under FICA laws. Of the $240,000, a sum of $28,000 was paid to employees who had already reached the $7,000 maximum wages subject to unemployment taxes (rates: 5.4 % state and 0.6 % federal). Withholding taxes amounted to $72,000, and $2,900 was withheld for investment in company stock per an agreement with employees. Required a. Prepare the journal entry to record the salary payment and the liabilities for the payroll deductions. b. Prepare the journal entry to record the employer payroll expenses. c. Prepare the journal entry to record the remittance of the taxes. • Note: Round answers to the nearest whole dollar. Date Account a. Jun. 30 Salary Expense Withholding Taxes Payable Stock Investment Payable Dr. 240,000 Cr. 0 0 FICA Taxes Payable Cash 0 72,000 2,900 ▼ 0 13,770 x 0 151,330 X To record salaries and related deductions. b. Jun. 30 Payroll Tax Expense 26,490 0 × SUTA Taxes Payable 0 11,448 FUTA Taxes Payable 0 1,272 FICA Taxes Payable 0 13,770 x To record employer payroll taxes. c. Jun. 30 Withholding Taxes Payable 72,000 0 SUTA Taxes Payable 11,448 FUTA Taxes Payable 1,272 Stock Investment Payable Cash To record remittance of taxes. 2,900 0 0 ☑ 0 0 × 112,260 x
Transcribed Image Text:Ryan Company paid salaries for the month of June amounting to $240,000. Of this amount, $60,000 was received by employees who had already been paid the $285,600 maximum amount of annual earnings taxable in one year under FICA laws. Of the $240,000, a sum of $28,000 was paid to employees who had already reached the $7,000 maximum wages subject to unemployment taxes (rates: 5.4 % state and 0.6 % federal). Withholding taxes amounted to $72,000, and $2,900 was withheld for investment in company stock per an agreement with employees. Required a. Prepare the journal entry to record the salary payment and the liabilities for the payroll deductions. b. Prepare the journal entry to record the employer payroll expenses. c. Prepare the journal entry to record the remittance of the taxes. • Note: Round answers to the nearest whole dollar. Date Account a. Jun. 30 Salary Expense Withholding Taxes Payable Stock Investment Payable Dr. 240,000 Cr. 0 0 FICA Taxes Payable Cash 0 72,000 2,900 ▼ 0 13,770 x 0 151,330 X To record salaries and related deductions. b. Jun. 30 Payroll Tax Expense 26,490 0 × SUTA Taxes Payable 0 11,448 FUTA Taxes Payable 0 1,272 FICA Taxes Payable 0 13,770 x To record employer payroll taxes. c. Jun. 30 Withholding Taxes Payable 72,000 0 SUTA Taxes Payable 11,448 FUTA Taxes Payable 1,272 Stock Investment Payable Cash To record remittance of taxes. 2,900 0 0 ☑ 0 0 × 112,260 x
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