Question

Question content area payroll accounts and year-end entries the following accounts, with the balances indicated, appear in the ledger of garcon co. on december 1 of the current year: 211 salaries payable – 212 social security tax payable 11,970 213 medicare tax payable 3,150 214 employees federal income tax payable 19,425 215 employees state income tax payable 18,900 216 state unemployment tax payable 1,995 217 federal unemployment tax payable 630 218 retirement savings deductions payable 5,000 219 medical insurance payable 36,500 411 operations salaries expense 1,272,000 511 officers salaries expense 830,000 512 office salaries expense 211,000 519 payroll tax expense 180,600 the following transactions relating to payroll, payroll deductions, and payroll taxes occurred during december: dec. 2 issued check no. 410 for5,000 to jay bank to invest in a retirement savings account for employees. 2 issued check no. 411 to jay bank for 34,545 in payment of11,970 of social security tax, 3,150 of medicare tax, and19,425 of employees' federal income tax due. 13 journalized the entry to record the biweekly payroll. a summary of the payroll record follows:

Answer 1

Payroll taxes include deductions from employee wages and employer-paid taxes, covering Social Security, Medicare, and income taxes. Both the employer and employee share the costs, but the employer's contributions may indirectly affect employee wages. Proper payroll accounting is essential for compliance with federal and state tax laws.

Step-by-step explanation:

Understanding Payroll Taxes and Deductions

When discussing payroll taxes, it's critical to distinguish between two types: deductions from an employee's wages and taxes paid by the employer based on the employee's wages. Deductions typically include federal and state income taxes, Social Security, and Medicare, known as withholding taxes or PAYE. Both employer and employee share in the cost of Social Security and Medicare taxes, with employees seeing 6.2% deducted for Social Security and 1.45% for Medicare from their paychecks. Employers match these contributions but may pass these costs to employees indirectly through lower wages.

Independent contractors, such as those in the gig economy receiving a 1099 tax statement, must pay both the employee and employer side of payroll taxes. For proper payroll accounting and year-end entries, businesses must ensure that all payroll-related transactions are correctly recorded. This includes the payment of liabilities such as Social Security tax, Medicare tax, federal and state income tax withholdings, and other deductions like retirement savings and medical insurance payable.

Payroll taxes in the United States are assessed at different levels, including federal, state, and sometimes local jurisdictions. Employers are responsible for reporting and paying these taxes, generally on a quarterly and annual basis.