Question

Urban Window Company had gross wages of $320,000 during the week ended July 15. The number of wages subject to social security tax was $320,000, while the number of wages subject to federal and state unemployment taxes was $40,000. Tax rates are as follows:

Social security Medicare State unemployment Federal unemployment 6.0% 1.5% 5.4% 0.6% The total amount withheld from employee wages for federal taxes was $75,200. For a compound transaction, if an amount box does not require an entry, leave it blank. a. Journalize the entry to record the payroll for the week of July 15 b. Journalize the entry to record the payroll tax expense incurred for the week of July 15.

Answer 1

wages expense 320,000 debit

cash 218,400 credit

FICA tax payable 2,160 credit

SUTA tax payable 240 credit

Social security payable 24,000 credit

wages income tax payable 75,200 credit

--to record July 15th payment to employees wages--

payroll tax expenses 26,400 debit

FICA tax payable 2,160 credit

SUTA tax payable 240 credit

Social security payable 24,000 credit

---to record the payroll tax for the week ended July 15th--

Step-by-step explanation:

We multiply the wages subjet to taxation by each rate:

social security:

320,000 x 7.5% = 24,000

SUTA

40,000 x 5.4% = 2,160

FICA

40,000 x 0.6% = 240

For this three concepts, the employee will have liability for the same amount for payroll taxes

Income tax 75,200

net wages: 320,000 - 24,000 - 2,160 - 240 - 75,200 = 218,400