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Midwest Shipping pays employees at the end of each month. Payroll information is listed below for January, the first month of the fiscal year. Assume that none of the employees exceeds the Federal unemployment tax maximum salary of $7,000 in January.


Salaries $ 700,000
Federal and state income taxes withheld 150,000
Federal unemployment tax rate 0.80 %
State unemployment tax rate (after FUTA deduction) 5.40 %
Social Security (FICA) tax rate 7.65 %

Record salaries expense and payroll tax expense for the January pay period. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Respuesta :

Answer and Explanation:

The journal entries are shown below:

a. Salaries Expenses A/c Dr. $700,000

      To Federal and State Income Tax Payable A/c  $150,000

      To FICA Taxes Payable A/c ($700,000 × 7.65%)) $53,550

      To Salaries Payable A/c  $496,450

(Being the salaries expense is recorded)

b. Payroll Tax Expenses A/c Dr. $96,950

               To FICA Tax Payable A/c  $53,550

               To State Unemployment Taxes Payable A/c ($700,000 × 5.40%)  $37,800

               To Federal Unemployment Taxes Payable Ac ($700,000 × 0.80%)  $5,600

(Being the payroll tax expense is recorded)

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