Question

Terps Company pays its employees monthly. The payroll information listed below is for January 2021, the first month of the fiscal year. Assume none of the employees' earnings reached $7,000 during the month. Salaries $ 80,000 Federal income taxes to be withheld 16,000 Federal unemployment tax rate (FUTA) 0.80 % State unemployment tax rate (after FUTA deduction) 5.40 % Social security tax rate 6.2 % Medicare tax rate 1.45 % The journal entry to record payroll for the January 2021 pay period will include a debit to payroll tax expense of:

Answer 1

Answer: $11080

Step-by-step explanation:

The payroll tax expense will be calculated thus:

Social security tax = $80000 × 6.2% = $4960

Add: Medicare tax = $80000 × 1.45% = $1160

Add: Federal unemployment tax = $80000 × 0.80% = $640

Add: State unemployment tax = $80000 × 5.40% = $4320

Payroll tax expense = $11080

The journal entry to record payroll for the January 2021 pay period will include a debit to payroll tax expense of $11080.