Question

Widmer Company had gross wages of $332,000 during the week ended June 17. The amount of wages subject to social security tax was $298,800, while the amount of wages subject to federal and state unemployment taxes was $42,000 Tax rates are as follows:

Socially Medicare 6.0%
Medicare 1.5%
State unemployment 5.4%
Federal hemployment 0.8%
The total amount withheld from employee wages for federal taxes was $66,400.
If an amount box does not require an entry, leave it blank. If required, round answers to two decimal places,
a. Journalize the entry to record the payroll for the week of June 17.
b. Journalize the entry to record the payroll tax expense incurred for the week of June 17.

Answer 1

To journalize the payroll entry, debits are made to Salaries and Wages Expense for gross wages and credits to various payable accounts for withheld taxes. To record payroll tax expenses, debits are made to Payroll Tax Expense for the employer's portion of the taxes and credits to the respective payable accounts.

Journalizing Payroll Entries

To journalize the entry for the payroll for the week of June 17, we need to address the various components of the payroll expenses:

1. Gross Wages
2. Social Security Tax
3. Medicare Tax
4. Federal and State Unemployment Taxes
5. Withholding of Federal Taxes

Here are the calculations and journal entries:

a. Payroll entry for the week of June 17:

• Gross Wages: $332,000
• Federal Taxes Withheld: $66,400
• Social Security Tax (6.0% of $298,800): $17,928
• Medicare Tax (1.5% of $298,800): $4,482

Journal Entry:

Debit Salaries and Wages Expense $332,000

Credit Withholding Taxes Payable $66,400

Credit Social Security Taxes Payable $17,928

Credit Medicare Taxes Payable $4,482

b. To record the payroll tax expense incurred for the week of June 17, we calculate employer’s portion of Social Security and Medicare, and the federal and state unemployment taxes:

• Employer's Social Security Tax (same as employee's): $17,928
• Employer's Medicare Tax (same as employee's): $4,482
• State Unemployment Tax (5.4% of $42,000): $2,268
• Federal Unemployment Tax (0.8% of $42,000): $336

Journal Entry:

Debit Payroll Tax Expense $24,014

Credit Social Security Taxes Payable $17,928

Credit Medicare Taxes Payable $4,482

Credit State Unemployment Taxes Payable $2,268

Credit Federal Unemployment Taxes Payable $336