Question

The following monthly data are taken from Ramirez Company at July 31: Sales salaries, $600,000; Office salaries, $120,000; Federal income taxes withheld, $180,000; State income taxes withheld, $40,000; Social security taxes withheld, $44,640; Medicare taxes withheld, $10,440; Medical insurance premiums, $14,500; Life insurance premiums, $11,500; Union dues deducted, $8,500; and Salaries subject to unemployment taxes, $65,000. The employee pays 40% of medical and life insurance premiums. Assume that FICA taxes are identical to those on employees and that SUTA taxes are 5.4% and FUTA taxes are 0.6%.

1&2. Using the above information, complete the below table and prepare the journal entries to record accrued payroll and cash payment of the net payroll for July.
3. Using the above information, complete the below table.
4. Record the accrued employer payroll taxes and all other employer-paid expenses and the cash payment of all liabilities for July-assume that FICA taxes are identical to those on employees and that SUTA taxes are 5.4% and FUTA taxes are 0.6%.

Answer 1

The deductions and taxes can be calculated based on the given information. The Social Security deduction is 6.2% of the gross annual income, Medicare is 1.45% of the gross annual income, and 15% of the gross annual income is assumed to pay for federal and state taxes. Calculating the actual amounts for each deduction and tax:

Step-by-step explanation:

The deductions and taxes can be calculated based on the given information.

The Social Security deduction is 6.2% of the gross annual income, Medicare is 1.45% of the gross annual income, and 15% of the gross annual income is assumed to pay for federal and state taxes.

To calculate the deductions and taxes, we can use the following information:

• Social Security taxes withheld = Salaries subject to unemployment taxes * 0.062;
• Medicare taxes withheld = Salaries subject to unemployment taxes * 0.0145;
• Federal income taxes withheld = Salaries subject to unemployment taxes * 0.15;
• State income taxes withheld = Salaries subject to unemployment taxes * 0.15;

Calculating the actual amounts for each deduction and tax:

• Social Security taxes withheld = $65,000 * 0.062 = $4,030;
• Medicare taxes withheld = $65,000 * 0.0145 = $942.50;
• Federal income taxes withheld = $65,000 * 0.15 = $9,750;
• State income taxes withheld = $65,000 * 0.15 = $9,750;

Therefore, the total deductions and taxes are:

• Social Security deduction: $4,030;
• Medicare deduction: $942.50;
• Federal income tax withholding: $9,750;
• State income tax withholding: $9,750.