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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. 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. If an amount box does not require an entry, leave it blank.

User Keisy
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Answer:

a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.8%.

  • $9,800

b. Journalize the entry to record the accrual of payroll taxes. If an amount box does not require an entry, leave it blank.

  • Dr FICA Social Security expense 6,600
  • Dr FICA Medicare expense 1,650
  • Dr Federal unemployment tax expense 200
  • Dr State unemployment tax expense 1,350
  • Cr FICA Social Security payable 6,600
  • Cr FICA Medicare payable 1,650
  • Cr Federal unemployment tax payable 200
  • Cr State unemployment tax payable 1,350

Step-by-step explanation:

payroll taxes should be:

social security $110,000 x 6% = $6,600

Medicare $110,000 x 1.5% = $1,650

federal unemployment $25,000 x 0.8% = $200

state unemployment $25,000 x 5.4% = $1,350

total = $9,800

Both employees and employers must pay equal amounts of FICA taxes (social security and medicare), but only employees pay unemployment taxes.

User Abhas Tandon
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