During January, Luxury Cruise Lines incurs employee salaries of $2.9 million. Withholdings in January are $221,850 for the employee portion of FICA, $435,000 for federal income tax, $181,250 for state income tax, and $29,000 for the employee portion of health insurance (payable to Blue Cross Blue Shield). The company incurs an additional $179,800 for federal and state unemployment tax and $87,000 for the employer portion of health insurance.

Required:

A) Record the employee salary expense, withholdings, and salaries payable.

B) Record the employer-provided fringe benefits.

C) Record the employer payroll taxes.

Question

Gemma Huffman

Business

20 September, 22:32

During January, Luxury Cruise Lines incurs employee salaries of $2.9 million. Withholdings in January are $221,850 for the employee portion of FICA, $435,000 for federal income tax, $181,250 for state income tax, and $29,000 for the employee portion of health insurance (payable to Blue Cross Blue Shield). The company incurs an additional $179,800 for federal and state unemployment tax and $87,000 for the employer portion of health insurance.

Required:

A) Record the employee salary expense, withholdings, and salaries payable.

B) Record the employer-provided fringe benefits.

C) Record the employer payroll taxes.

+1

Answers (1)

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Rodrigo Terry · Answer 1

The journal entries are shown below:

a. Salaries expense $2,900,000

To Income tax payable $616,250 ($435,000 + $181,250)

To FICA tax payable $221,850

To Account payable $29,000

To Salaries payable $2,032,900

(Being the employee salary expense, withholdings, and salaries payable is recorded)

b. Salaries expense $87,000

To Account payable $87,000

(Being the employer-provided fringe benefits is recorded)

c. Payroll tax expense $179,800

FICA tax expense $221,850

To Unemployment tax payable $401,650

(being the employer payroll taxes is recorded)