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Business Accounting Connect Access Card for Financial Accounting: Information and Decisions

Employer Payroll tax expense: Apart from Gross salaries which are being offered to the employees, the employers are also required to contribute towards the taxes to the Federal and state. The FICA social security tax and Medicare tax need to be equally contributed by the employer upto the threshold limit. Apart from these taxes, the unemployment tax both for Federal and State need to be contributed by the employer till the salaries of each particular employee does not reach the threshold limit. To prepare: The Journal entries for payment of salaries and related to Payroll tax expenses of BMX in the first case. The Journal entries have been made as under: S. No. Particulars Debit ($) Credit ($) 1. Salaries expense Dr. FICA social security tax payable FICA Medicare tax payable Federal tax payable Cash (To record the net salaries paid to the employees.) 800 49.6 11.6 80 658.8 2. Payroll tax expenses Dr. FICA social security tax payable FICA Medicare tax payable FUTA SUTA (To record payroll expense incurred.) 109.2 49.6 11.6 24.8 23.2 3. FICA social security tax payable Dr. FICA Medicare tax payable Dr. FUTA Dr. SUTA Dr. Federal tax payable Dr. Cash (To record the payment towards tax liabilities.) 99.2 23.2 24.8 23.2 80 250.4 The explanations of the entries are as under: The Gross salaries after deducting the FICA social security and Medicare tax of equal amount as contributed by the employer and also the federal tax liability of the employee has been paid by debiting the salaries expense and credit to be made of Cash account for the net amount paid and recognizing the taxes deducted as liability. Payroll tax expenses shall be debited for the total amount of taxes to be contributed by the employer and the credit shall be made to respective tax liabilities. The total of taxes so deducted and contributed in the above two steps shall be paid off by debiting the respective liabilities and credit shall be made to Cash account.

Employer Payroll tax expense: Apart from Gross salaries which are being offered to the employees, the employers are also required to contribute towards the taxes to the Federal and state. The FICA social security tax and Medicare tax need to be equally contributed by the employer upto the threshold limit. Apart from these taxes, the unemployment tax both for Federal and State need to be contributed by the employer till the salaries of each particular employee does not reach the threshold limit. To prepare: The Journal entries for payment of salaries and related to Payroll tax expenses of BMX in the first case. The Journal entries have been made as under: S. No. Particulars Debit ($) Credit ($) 1. Salaries expense Dr. FICA social security tax payable FICA Medicare tax payable Federal tax payable Cash (To record the net salaries paid to the employees.) 800 49.6 11.6 80 658.8 2. Payroll tax expenses Dr. FICA social security tax payable FICA Medicare tax payable FUTA SUTA (To record payroll expense incurred.) 109.2 49.6 11.6 24.8 23.2 3. FICA social security tax payable Dr. FICA Medicare tax payable Dr. FUTA Dr. SUTA Dr. Federal tax payable Dr. Cash (To record the payment towards tax liabilities.) 99.2 23.2 24.8 23.2 80 250.4 The explanations of the entries are as under: The Gross salaries after deducting the FICA social security and Medicare tax of equal amount as contributed by the employer and also the federal tax liability of the employee has been paid by debiting the salaries expense and credit to be made of Cash account for the net amount paid and recognizing the taxes deducted as liability. Payroll tax expenses shall be debited for the total amount of taxes to be contributed by the employer and the credit shall be made to respective tax liabilities. The total of taxes so deducted and contributed in the above two steps shall be paid off by debiting the respective liabilities and credit shall be made to Cash account.

Solution Summary: The author explains that employers are required to contribute towards the federal and state taxes, including the FICA social security and Medicare tax.

Connect Access Card for Financial Accounting: Information and Decisions

Connect Access Card for Financial Accounting: Information and Decisions

8th Edition

ISBN: 9781259662966

Author: John J Wild

Publisher: McGraw-Hill Education

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Connect Access Card for Financial Accounting: Information and Decisions

Ch. 9 - Prob. 1DQ Ch. 9 - Prob. 2DQ Ch. 9 - Prob. 3DQ Ch. 9 - Prob. 4DQ Ch. 9 - What is the combined amount (in percent) of the...Ch. 9 - What is the current Medicare tax rate? This rate...Ch. 9 - Prob. 7DQ Ch. 9 - Prob. 8DQ Ch. 9 - Prob. 9DQ Ch. 9 - Why are warranty liabilities usually recognized on...

Ch. 9 - Prob. 11DQ Ch. 9 - Prob. 12DQ Ch. 9 - Prob. 13DQ Ch. 9 - Prob. 14DQ Ch. 9 - Prob. 15DQ Ch. 9 - Prob. 16DQ Ch. 9 - Prob. 17DQ Ch. 9 - Prob. 1QS Ch. 9 - Prob. 2QS Ch. 9 - Ticketsales, Inc., receives $5,000,000 cash in...Ch. 9 - Prob. 4QS Ch. 9 - Prob. 5QS Ch. 9 - Prob. 6QS Ch. 9 - Prob. 7QS Ch. 9 - Prob. 8QS Ch. 9 - Prob. 9QS Ch. 9 - Prob. 10QS Ch. 9 - Prob. 11QS Ch. 9 - Prob. 12QS Ch. 9 - Sera Corporation has made and recorded its...Ch. 9 - Prob. 1E Ch. 9 - Prob. 2E Ch. 9 - Prob. 3E Ch. 9 - Interest-bearing notes payable with year-end...Ch. 9 - Prob. 5E Ch. 9 - Prob. 6E Ch. 9 - Prob. 7E Ch. 9 - Prob. 8E Ch. 9 - Prob. 9E Ch. 9 - Hitzu Co. sold a copier costing $4,800 with a...Ch. 9 - Prob. 11E Ch. 9 - Prob. 12E Ch. 9 - Accounting for contingent liabilities C3 Prepare...Ch. 9 - Prob. 14E Ch. 9 - Prob. 15E Ch. 9 - Prob. 16E Ch. 9 - Prob. 18E Ch. 9 - Prob. 1PSA Ch. 9 - Prob. 2PSA Ch. 9 - Prob. 3PSA Ch. 9 - Prob. 4PSA Ch. 9 - Prob. 5PSA Ch. 9 - Entries for payroll transactions P2 P3 P5...Ch. 9 - Prob. 1PSB Ch. 9 - Prob. 2PSB Ch. 9 - Fishing Guides Co. has four employees. FICA Social...Ch. 9 - Prob. 4PSB Ch. 9 - Shown here are condensed income statements for two...Ch. 9 - Prob. 6PSB Ch. 9 - Prob. 9SP Ch. 9 - Refer to the financial statements of Apple in...Ch. 9 - Key figures for Apple and Google follow. *Apple...Ch. 9 - Prob. 3BTN Ch. 9 - Prob. 5BTN Ch. 9 - Assume that your team is in business and you must...Ch. 9 - Prob. 7BTN Ch. 9 - Prob. 8BTN Ch. 9 - Prob. 9BTN

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