Question

According to the accountant of Skysong, Inc., its payroll taxes for the week were as follows: $139.00 for FICA taxes, $19.50 for federal unemployment taxes, and $99.00 for state unemployment taxes. Journalize the entry to record the accrual of the payroll taxes. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 10.50.)

Answer 1

The journal entry to record the accrual of payroll taxes for Skysong, Inc. includes debiting Payroll Tax Expense for $257.50 and crediting FICA Taxes Payable for $139.00, Federal Unemployment Taxes Payable for $19.50, and State Unemployment Taxes Payable for $99.00.

Step-by-step explanation:

When recording the accrual of payroll taxes for Skysong, Inc., we need to recognize the liability that the company has incurred. The total payroll taxes consist of FICA, federal unemployment taxes, and state unemployment taxes. Below is the journal entry Skysong, Inc. would make to record the accrual of these taxes:

• Debit Payroll Tax Expense for the total amount of the taxes: $139.00 (FICA taxes) + $19.50 (federal unemployment taxes) + $99.00 (state unemployment taxes) = $257.50.
• Credit FICA Taxes Payable for $139.00.
• Credit Federal Unemployment Taxes Payable for $19.50.
• Credit State Unemployment Taxes Payable for $99.00.

The journal entry would look like this:

Debit Payroll Tax Expense: $257.50
Credit FICA Taxes Payable: $139.00
Credit Federal Unemployment Taxes Payable: $19.50
Credit State Unemployment Taxes Payable: $99.00

By making this entry, Skysong, Inc. recognizes its tax liabilities until the actual payment is made.

Answer 2

the journal record to accrual of payroll taxes:

Dr FICA tax expense 139.00

Dr Federal unemployment tax expense 19.50

Dr State unemployment tax expense 99.00

Cr FICA tax payable 139.00

Cr Federal unemployment tax payable 19.50

Cr State unemployment tax payable 99.00

Accrual accounting states that costs must be recorded during the periods that they actually occur, not necessarily when they are paid for. In this case, the company owes the payroll taxes since it hasn't paid them yet, but must record the expense during the month that they occurred.