Question

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $117,000 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid to its employee.

Gross Pay through August Gross Pay for September
a. $6,440 $805

Prepare the employer's September 30 journal entries to record the employer's payroll taxes expense and its related liabilities. (Round your answers to 2 decimal places.)

Answer 1

wages expense 805 debit

medicare 11.67 credit

social security 49.91 credit

wages payable 743.42 credit

--to record wages for employees--

payroll expense 81.182 debit

income tax payable 11.67 credit

FICA payable 49.91 credit

SUTA payable 16.24 credit

FUTA payable 3.36 credit

--to record payroll expense for the month--

Step-by-step explanation:

before week wages acc wages

6440 805 7245

As we are above the celling for SUTA and FUTA we will compare the before accumulated wages and the celling to know the tax amount.

For medicare and SS we aren't above celling so we should calculate for the full wages.

Medicare SS

11.6725 49.91

805 x 1.45% 805 x 6.2%

SUTA FUTA

16.24 3.36

(7000-6440)x0.029 (7000-6440)x0.006