Question

On January 15, the end of the first pay period of the year, North Company's employees earned $28,000 of sales salaries. Withholdings

from the employees' salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $3,300 of
federal income taxes, $616 of medical insurance deductions, and $180 of union dues. No employee earned more than $7,000 in this
first period.
Prepare the journal entry to record North Company's January 15 salaries expense and related liabilities.
View transaction list
Journal entry worksheet
1
Record the employee payroll for period.
Note: Enter debits before credits
Date
January 15
General Journal
Debit
Credit
>

Answer 1

On January 15, North Company recorded $28,000 in sales salaries. After with holdings (FICA, federal income taxes, medical insurance, and union dues).

Journal Entry for North Company's Payroll

Date: January 15

Description: To record employee payroll for period

Debit:

• Salaries Expense: $28,000 (gross earnings)

Credit:

• FICA Social Security Taxes Payable: $1,736 (6.2% of $28,000)
• FICA Medicare Taxes Payable: $406 (1.45% of $28,000)
• Federal Income Taxes Payable: $3,300 (withholdings)
• Medical Insurance Deductions Payable: $616 (withholdings)
• Union Dues Payable: $180 (withholdings)
• Salaries Payable: $22,762 (net pay after deductions)
• Total: $28,000 = $28,000

Step-by-step explanation:

1. Salaries Expense: This is the total gross earnings of the employees.
2. FICA Taxes Payable: Both the employer and employee portions of Social Security and Medicare taxes are recorded as liabilities payable to the government.
3. Federal Income Taxes Payable: This represents the total withheld federal income taxes.
4. Medical Insurance Deductions Payable and Union Dues Payable: These represent the amounts withheld from employees for these benefits and dues.
5. Salaries Payable: This represents the net pay remaining after all deductions and is paid to the employees.

Note: This entry assumes that North Company pays both the employer and employee portions of FICA taxes. If they only pay the employer portion, the debit to Salaries Expense would be higher, and the credit to FICA Taxes Payable would be correspondingly higher.