Question

According to a summary of the payroll of Mountain Streaming Co., $110,000 was subject to the 6.0% social security tax and the 1.5% Medicare tax. Also, $25,000 was subject to state and federal unemployment taxes.

Required:
a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.8%.
b. Journalize the entry to record the accrual of payroll taxes.

Answer 1

Step-by-step explanation:

a

Social Security Tax 6600 = 110000*6%

Medicare Tax 1650 = 110000*1.5%

State Unemployment Tax 1350 = 25000*5.4%

Federal Unemployment Tax 200 = 25000*0.8%

Employer's payroll taxes 9800

b

Payroll Tax Expense 9800

Social Security Tax Payable 6600

Medicare Tax Payable 1650

State Unemployment Tax Payable 1350

Federal Unemployment Tax Payable 200

To state Unemployment Tax Payable 1350

Answer 2

Answer: a).The employer's payroll taxes amounts to $9,800.00

b). The journal entries are a debit to payroll taxes with $9,800, and a credit of $6,600 to security taxes payable; $1,650 to medicare taxes payable; $1,350 to state unemployment tax payable; $200 to federal unemployment taxe payable.

Explanation: Employer Payroll taxes are taxes which the employer must pay tothe employees alongsidetheir salaries.

To calculate the payroll taxes allthe taxes are summed up.

Social security tax = $110,000 × 6% = $6,600

Medicare tax = $110,000 × 1.5% = $1,650

State unemployment tax = $25,000 × 5.4% = $1,350

Federal unemployment tax = $25,000 × 0.8% = $200

Total employer payroll taxes = $9,800