The payroll of Pearl Company for September 2019 is as follows. Total payroll was $444,000, of which $108,000 is exempt from Social Security tax because it represented amounts paid in excess of $128,400 to certain employees. The amount paid to employees in excess of $7,000 (the maximum for both federal and state unemployment tax) was $394,000. Income taxes in the amount of $79,200 were withheld, as was $9,600 in union dues. The state unemployment tax is 3.5%, but Pearl Company is allowed a credit of 2.3% by the state for its unemployment experience. Also, assume that the current FICA tax is 7.65% on an employee’s wages to $128,400 and 1.45% in excess of $128,400. No employee for Pearl makes more than $135,000. The federal unemployment tax rate is 0.8% after state credit. Prepare the necessary journal entries if the wages and salaries paid and the employer payroll taxes are recorded separately.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The payroll of Pearl Company for September 2019 is as follows.

Total payroll was $444,000, of which $108,000 is exempt from Social Security tax because it represented amounts paid in excess of $128,400 to certain employees. The amount paid to employees in excess of $7,000 (the maximum for both federal and state unemployment tax) was $394,000. Income taxes in the amount of $79,200 were withheld, as was $9,600 in union dues. The state unemployment tax is 3.5%, but Pearl Company is allowed a credit of 2.3% by the state for its unemployment experience. Also, assume that the current FICA tax is 7.65% on an employee’s wages to $128,400 and 1.45% in excess of $128,400. No employee for Pearl makes more than $135,000. The federal unemployment tax rate is 0.8% after state credit.

Prepare the necessary journal entries if the wages and salaries paid and the employer payroll taxes are recorded separately. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts .Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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