Bailey Dry Cleaners has six employees who were paid the following wages during 2019: Frank Johnson $27000 Bill Long 18000 Duff Morse 130000 Laura Stewart 28000 Cindy Sharpe 26000 Melissa Lebster 20000 Total 249000 The state allows the company a 1% unemployment compensation merit-rating reduction from the normal rate of 5.4%. The federal unemployment rate is 0.6%. The maximum unemployment wages per employee are $7,000 for both the state and the federal government. Income tax withholdings of 20% are applied to all employees. A FICA tax rate of 8% on the employee and 8% on the employer is applied to the first $128,400 of each employee’s wages. Required: Calculate the amount of payroll taxes to be paid by Bailey. Prepare the journal entries to record the payment of payroll and the payroll tax expense.
Bailey Dry Cleaners has six employees who were paid the following wages during 2019: Frank Johnson $27000 Bill Long 18000 Duff Morse 130000 Laura Stewart 28000 Cindy Sharpe 26000 Melissa Lebster 20000 Total 249000 The state allows the company a 1% unemployment compensation merit-rating reduction from the normal rate of 5.4%. The federal unemployment rate is 0.6%. The maximum unemployment wages per employee are $7,000 for both the state and the federal government. Income tax withholdings of 20% are applied to all employees. A FICA tax rate of 8% on the employee and 8% on the employer is applied to the first $128,400 of each employee’s wages. Required: Calculate the amount of payroll taxes to be paid by Bailey. Prepare the journal entries to record the payment of payroll and the payroll tax expense.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bailey Dry Cleaners has six employees who were paid the following wages during 2019:
Frank Johnson $27000
Bill Long 18000
Duff Morse 130000
Laura Stewart 28000
Cindy Sharpe 26000
Melissa Lebster 20000
Total 249000
The state allows the company a 1%
Required:
-
Calculate the amount of payroll taxes to be paid by Bailey.
-
Prepare the
journal entries to record the payment of payroll and the payroll tax expense.
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