Question

Employee gross wages due for the month of December were $16,000. Bengal withheld cash for payroll liabilities consisting of FICA taxes of $1,250, and employee income taxes of $1,100. The remaining net cash due to the employees was paid to the employees on December 30th. Record two journal entries, #1 for December's wage expense, and #2 for December's payroll tax match.

Answer 1

Journal Entry #1:

Debit: Wage Expense for $16,000

Credit: Cash for $13,650

Credit: Employee Income Tax Payable for $1,100

Credit: FICA Taxes Payable for $1,250

Explanation: The company records the wage expense for December and the payment of net cash due to employees after withholding taxes.

Journal Entry #2:

Debit: FICA Taxes Payable for $1,250

Credit: FICA Taxes Expense for $1,250

Explanation: The company records the payroll tax match for FICA taxes for December.