Explanation Payroll Taxes Payable: Payroll Tax payable is the tax expenses which becomes accrued and is imposed on the income of the employees and are calculated as a percentage of the salary. It includes Medicare taxes, FICA taxes, State unemployment taxes, and Federal unemployment taxes. It is an expense on the income statement which becomes an expense at the time when the employee’s wages and salaries have been expensed. Journalizing: Journalizing is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the accounts are posted to the relevant ledger accounts. Accounting rules for journal entries: To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains. To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains. Following is the Journal entry for recoding salary accrual: Date Particulars Post ref. Debit ($) Credit ($) Salaries Expense 1,200,00 FICA Taxes Payable 74,400 Medicare Tax Payable 17,400 Federal Income Tax Payable 360,000 State & Local Income Tax Payable 96,000 Salaries Payable 652,200 ( beingsalary expenses recoded ) Table (1) Payroll Tax expenses are the expenses on salary which the company has to incur. Payroll Tax Expense is being paid hence debited. FICA Taxes Payable is a liability for the company. Company is paying FICA tax at the rate 6.2% of the total payroll indicating increasing liability, hence credited. Medicare Tax Payable is a liability for the company. Medicare Tax rate is 1.45% and is being paid indicating increasing liability hence credited with $17,400. Federal Income Taxes Payable is a liability for the company.30% Federal Income tax is also being paid by the company hence credited with $360,000. State & Local Taxes Payable is a liability for the company. 8% state and local taxes are also being paid by the company hence, credited. Salaries Payable Taxes Payable is also a liability for the company. Remaining is the salaries payable after deducting all the taxes from the payroll and is credited with $652,200. Following is the journal entry to record accrued salaries: Date Particulars Post ref. Debit ($) Credit ($) Payroll Tax expense 93,800 FICA Taxes Payable 74,400 Medicare Tax Payable 17,400 FUTA Tax Payable 600 State Unemployment Tax Payable 1,400 ( being payroll expenses accrued) Table (2) Payroll Tax expense is an expense for the company. Payroll expense is being paid indicating decreasing expense hence debited with $93,800. FICA Taxes Payable is a liability for the company. 6.2% FICA tax is being paid indicating increasing liability hence credited with $74,400. Medicare Tax Payable is a liability for the company. Medicare Tax is also being paid by the company at the rate of 1.45% indicating increasing liability, hence credited...

2nd Edition

ISBN: 9780134730370

Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

Publisher: PEARSON

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Chapter 13, Problem 13.19BE

To determine

To prepare: The journal for recording the bi-weekly salary accrual and payment and also for payroll tax expense.

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Chapter 13, Problem 13.18BE

Chapter 13, Problem 13.20BE

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AZT Company has one employee who has worked January - March 15 of the current year. The employee is single, paid semi-monthly, and claims two allowances on his W-2. The federal withholding is $143. The company is in a state that has no state income taxes. The FICA Social Security tax rate is 6.2% on the first $118,500 of wages and the FICA Medicare tax rate is 1.45% on all wages. AZT Company's FUTA tax rate is 0.6% on the first $7,000 of wages and their SUTA tax rate is 1.95% on the first $8,000 of wages. The employee's earnings thus far are as follows: Gross pay Jan - Mar 15th Gross pay for March 31st $6,200 $1,280 Use the information above to calculate the employer's payroll taxes and prepare the journal entry AZT Company will use to record the employer's portion of the payroll taxes for the pay period ended March 31st. Date 03/31 Description Debit Credit to record employer's portion of payroll taxes for the pay period ending March 31st

Stone's gross pay for the week is $1,400. Stone's year-to-date pay is under the limit for OASDI. Assume that the rate for state and federal unemployment compensation taxes is 6% and that Stone's year-to-date pay has not yet exceeded the $7,000 cap. What is the amount of state and federal unemployment tax that his employer must record as payroll tax expense and pay to the federal and state governments? OA. $104.30 OB. $84.00 OC. $188.30 O D. $197.61

Maze Company has one employee that is paid $1,000 weekly. All of the employee's wages are subject to social security and Medicare taxes. Federal and state income tax withholding on the employee's pay are $100 and $40, respectively. Federal and state unemployment taxes amount to $8 and $56, respectively. What is the employer's weekly payroll tax expense? Group of answer choices $1,280.50 $280.50 $140.50 $1,000.00

Chapter 13 Solutions

Intermediate Accounting (2nd Edition)

Ch. 13 - Prob. 13.1Q Ch. 13 - Prob. 13.2Q Ch. 13 - Prob. 13.3Q Ch. 13 - Do sellers recognize sales taxes as expenses on...Ch. 13 - Prob. 13.5Q Ch. 13 - Prob. 13.6Q Ch. 13 - Prob. 13.7Q Ch. 13 - What is a gam contingency? Is It accrued and...Ch. 13 - Do firms always accrue and record loss...Ch. 13 - Prob. 13.10Q

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The journal for recording the bi-weekly salary accrual and payment and also for payroll tax expense.

Solution Summary: The author describes journaling as the process of recording the transactions of an organization in a chronological order.

To prepare: The journal for recording the bi-weekly salary accrual and payment and also for payroll tax expense.

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Chapter 13 Solutions