Question

During the month of January, an employee earned $5,900 of salary. Withholdings from the employee's salary consist of FiCA Social Security taxes of $365.80. FICA Medicare taxes of $85.55, federal income taxes of $628.35, and medical insurance deductions of $250.75. Prepare the journal entry to record the employer's salaries expense and related liabilities assuming these wages will be paid in early February. (Round your final answers to 2 decimal places.) Journal entry worksheet Rotel Enter debits before credits.

Answer 1

The journal entry to record an employer's salaries expense with associated liabilities includes the total salaries expense as a debit and the withholdings (such as FICA taxes, federal income taxes, and medical insurance) as credits. The net pay is then recorded as a credit to the Salaries Payable account.

Step-by-step explanation:

To record the employer's salaries expense and related liabilities for the employee's salary in January, you need to make a journal entry that reflects the total salaries expense and withholdings. Since the wages will be paid in early February, the salaries would typically be recorded as a liability (in this case, Salaries Payable) until they are actually paid. As an example, let's make the journal entry:

Debit: Salaries Expense $5,900.00 (to record the gross salary)
Credit: FICA Social Security Payable $365.80 (employer's liability for Social Security tax)
Credit: FICA Medicare Payable $85.55 (employer's liability for Medicare tax)
Credit: Federal Income Tax Payable $628.35 (employer's liability for federal income tax)
Credit: Medical Insurance Payable $250.75 (employer's liability for medical insurance deductions)
Credit: Salaries Payable $4,569.55 ($5,900.00 - $365.80 - $85.55 - $628.35 - $250.75 = $4,569.55 net pay to be paid to the employee)

Remember that these amounts represent withholdings from the employee's salary, and you would also need to record the employer's portion of payroll taxes in a separate journal entry.

Answer 2

To account for an employee's earned salary and associated withholdings, debit Salaries Expense for the full earned amount and credit the respective liability accounts for FICA Social Security, FICA Medicare, federal income taxes, and medical insurance, with the net amount after these deductions credited to Salaries Payable.

Step-by-step explanation:

To record the employer's salaries expense and related liabilities for the employee who earned $5,900 during the month of January, and will be paid in February, you would make the following journal entries:

• Debit Salaries Expense for $5,900 (the gross pay before deductions).
• Credit FICA Social Security Payable for $365.80.
• Credit FICA Medicare Payable for $85.55.
• Credit Federal Income Taxes Payable for $628.35.
• Credit Medical Insurance Payable for $250.75.
• Credit Salaries Payable for the net pay.

The Salaries Payable is calculated by subtracting all deductions from the gross salary, which equals $5,900 - ($365.80 + $85.55 + $628.35 + $250.75) = $4,569.55. This is the amount that the employee will actually receive and the employer owes this as a liability until it's paid.

Here is how the journal entry would look:

Salaries Expense................... $5,900
FICA Social Security Payable...... $365.80
FICA Medicare Payable............. $85.55
Federal Income Taxes Payable...... $628.35
Medical Insurance Payable......... $250.75
Salaries Payable.................. $4,569.55