According to a summary of the payroll of Sinclair Company, $505,000 was subject to the 6.0% social security tax and $545,000 was subject to the 1.5% Medicare tax. Also, $10,000 was subject to state and federal unemployment taxes. Required: 1. Calculate the employer's payroll taxes using the following rates: State unemployment, 4.2%; Federal unemployment, 0.8%. $ 2. Journalize the entry to record the accrual of the employer's payroll taxes. If an amount box does not require an entry, leave it blank.

Question

Elena Hoffman

Business

27 June, 23:55

According to a summary of the payroll of Sinclair Company, $505,000 was subject to the 6.0% social security tax and $545,000 was subject to the 1.5% Medicare tax. Also, $10,000 was subject to state and federal unemployment taxes. Required: 1. Calculate the employer's payroll taxes using the following rates: State unemployment, 4.2%; Federal unemployment, 0.8%. $ 2. Journalize the entry to record the accrual of the employer's payroll taxes. If an amount box does not require an entry, leave it blank.

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Desmond May · Answer 1

1. The computation is shown below:

State unemployment = $10,000 * 4.2% = $420

Federal unemployment = $10,000 * 0.8% = $80

2. The journal entry is shown below:

Payroll tax expense A/c Dr $38,975

To Social security tax A/c $30,300 ($505,000 * 6.0%)

To Medicate tax A/c $8,175 ($545,000 * 1.5%)

To State Unemployment tax payable A/c $420

To Federal Unemployment tax payable A/c $80

(Being the payroll tax expense is recorded)