Question

Payroll Taxes Champaign Inc., a company that provides educational consulting services to large universities across the nation, has a gross payroll of $62,000 for the pay period. The entire payroll is subject to Social Security and Medicare taxes. Champaign must also withhold $7,440 in federal income tax from the employees and pay state unemployment tax of $75. Assume that the Social Security tax rate is 6.2%, and Medicare tax rate is 1.45%.

Required:
Provide the necessary journal entries for Champaign to record these payroll taxes (round to nearest penny).

Answer 1

Date Account Title Debit Credit

XX-XX Wages Expense $62,000

Federal Income Tax Withholding Payable $7,440

Social Security Taxes Payable (Employee) $3,844

Medicare Taxes Payable (Employee) $ 899

Cash $49,817

Working

Social Security Taxes Payable (Employee) = 6.2% * 62,000 = $3,844

Medicare Taxes Payable (Employee) = 1.45% * 62,000 = $899

Date Account Title Debit Credit

XX-XX Social Security Taxes Expense (Employer) $3,844

Medicare Taxes expense (Employer) $899

State Unemployment tax expense $75

Social Security Taxes Payable (Employer) $3,844

Medicare Taxes Payable (Employer) $899

State Unemployment tax Payable $75