(a) Concept Introduction: Payroll means that amount of money that employer pays to the employees against the services provided by the employees to the employers. The payroll includes salaries of the employees. Payroll tax is the amount of tax levied on the payroll paid. As per FICA (Federal Insurance Contribution Act), from the payment of payroll by the employers to employees, employers have to withhold a percentile part from that payment. To calculate: The amount for the employer payroll taxes.

Question

Recording Payroll Taxes According to a summary of the payroll of Kirby Co., $380,500 in earnings were subject to the 7.6% FICA tax. Also, $51,368 in earnings were subject to state and federal unemployment taxes. Round your answers to the nearest cent. a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 4.5%; federal unemployment, 1%. b. Illustrate the effects on the accounts and financial statements of recording the accrual of payroll taxes. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Balance Sheet Statement of Income Assets Liabilities + Stockholders' Equity Cash Flows Statement No effect v No effect FICA tax payable v SUTA payable v FUTA payable v Retained earnings + = + Statement of Cash Flows Income Statement No effect v Payroll tax expense

Answer 1

Question

Chapter 8, Problem 8.7E

To determine

(a)

Concept Introduction:

Payroll means that amount of money that employer pays to the employees against the services provided by the employees to the employers. The payroll includes salaries of the employees.

Payroll tax is the amount of tax levied on the payroll paid. As per FICA (Federal Insurance Contribution Act), from the payment of payroll by the employers to employees, employers have to withhold a percentile part from that payment.

To calculate:

The amount for the employer payroll taxes.

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