Question

Dalton Industries has a weekly payroll of $70,000 for its hourly employees that is entirely subject to OASDI (6.2%) and Medicare (1.45%), federal (0.6%) and state (5.4%) unemployment taxes, with income tax withholding of $9,240, and union dues of $616.

A. How does the company record the wages paid and the employee payroll deductions?
B. How would the company record its payroll taxes?

Answer 1

The company records the wages paid and employee payroll deductions by debiting the Wages Expense account and crediting various payable accounts. The company records payroll taxes by debiting the Payroll Taxes Expense account and crediting the Accrued Payroll Taxes Payable account.

Step-by-step explanation:

The company records the wages paid and the employee payroll deductions by debiting the Wages Expense account for the total wages paid and crediting the Accrued Payroll Taxes Payable account for the employee payroll deductions. The company also credits the Employee Withholding Taxes Payable account for the income tax withholding and the Union Dues Payable account for the union dues.

For the payroll taxes, the company records the employer's share of OASDI (6.2%) and Medicare (1.45%) taxes by debiting the Payroll Taxes Expense account and crediting the Accrued Payroll Taxes Payable account. The company also records the federal (0.6%) and state (5.4%) unemployment taxes by debiting the Payroll Taxes Expense account and crediting the Accrued Payroll Taxes Payable account.