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22 January, 00:18

According to a summary of the payroll of Mountain Streaming Co., $110,000 was subject to the 6.0% social security tax and the 1.5% Medicare tax. Also, $25,000 was subject to state and federal unemployment taxes.

Required:

a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.8%.

b. Journalize the entry to record the accrual of payroll taxes.

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Answers (2)
  1. 22 January, 00:29
    0
    a

    Social Security Tax 6600 = 110000*6%

    Medicare Tax 1650 = 110000*1.5%

    State Unemployment Tax 1350 = 25000*5.4%

    Federal Unemployment Tax 200 = 25000*0.8%

    Employer's payroll taxes 9800

    b

    Payroll Tax Expense 9800

    Social Security Tax Payable 6600

    Medicare Tax Payable 1650

    State Unemployment Tax Payable 1350

    Federal Unemployment Tax Payable 200

    To state Unemployment Tax Payable 1350
  2. 22 January, 00:32
    0
    Answer: a). The employer's payroll taxes amounts to $9,800.00

    b). The journal entries are a debit to payroll taxes with $9,800, and a credit of $6,600 to security taxes payable; $1,650 to medicare taxes payable; $1,350 to state unemployment tax payable; $200 to federal unemployment taxe payable.

    Explanation: Employer Payroll taxes are taxes which the employer must pay tothe employees alongsidetheir salaries.

    To calculate the payroll taxes allthe taxes are summed up.

    Social security tax = $110,000 * 6% = $6,600

    Medicare tax = $110,000 * 1.5% = $1,650

    State unemployment tax = $25,000 * 5.4% = $1,350

    Federal unemployment tax = $25,000 * 0.8% = $200

    Total employer payroll taxes = $9,800
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