Question

During January, Luxury Cruise Lines pays employee salaries of $2 million. Withholdings in January are $153,000 for the employee portion of FICA, $300,000 for federal income tax, $125,000 for state income tax, and $20,000 for the employee portion of health insurance (payable to Blue Cross/Blue Shield). The company incurs an additional $124,000 for federal and state unemployment tax and $60,000 for the employer portion of health insurance.

Required
Record the employee salary expense, withholdings, and salaries payable.

Answer 1

See the journal entry below.

Step-by-step explanation:

The journal entry will look as follows:

General Journal Debit ($) Credit ($)

Salaries Expense 2,000,000

FICA Taxes Payable 153,000

Federal Income Taxes Payable 300,000

State Income Taxes Payable 125,000

Health Insurance Payable 20,000

Salaries Payable (w.1) 1,402,000

(To record the employee salary expense, withholdings and salaries payable.)

Working:

w.1: Salaries payable = Salaries Expense - FICA Taxes Payable - Federal Income Taxes Payable - State Income Taxes Payable - Health Insurance Payable = $2,000,000 - $153,000 - $300,000 - $125,000 - $20,000 = $1,402,000