Lee Financial Services pays employees monthly. Payroll information is listed below for January 2016, the first month of Lee's fiscal year. Assume that none of the employees exceeded any relevant wage base.
Salaries $ 500,000
Federal income taxes to be withheld 100,000
Federal unemployment tax rate 0.60 %
State unemployment tax rate (after FUTA deduction) 5.40 %
Social security tax rate 6.20 %
Medicare tax rate 1.45 %
Required:
a. Calculate the income and payroll taxes for the January 2016 pay period.
b. Prepare the appropriate journal entries to record salaries and wages expense (not paid) and payroll tax expense for the January 2016 pay period.