Question

​Jack, an employee of Desert​ Sky, Inc., has gross salary for May of . The entire amount is under the OASDI limit of​ $118,500 and thus subject to FICA. He is also subject to federal income tax at a rate of ​%. Which of the following is a part of the journal entry for accrual of the employer payroll​ taxes? (Assume a FICAOASDI Tax of ​% and FICAMedicare Tax of ​%.) ​Jack's income to date exceeds the FUTA and SUTA tax income limits

Answer 1

The journal entry for employer payroll taxes includes the employer's matching contributions for Social Security at 6.2% and Medicare at 1.45% of the gross salary. FUTA and SUTA are not included if the employee's income exceeds their income limits.

Step-by-step explanation:

The student's question pertains to the accrual of employer payroll taxes for an employee named Jack who works at Desert Sky, Inc.

To determine the correct journal entry for the employer's portion of FICA taxes, the calculations must include Social Security and Medicare taxes. For Social Security, the employer matches the employee's rate of 6.2% on gross wages up to the OASDI limit.

For Medicare, the rate is 1.45% with no wage limit. Additionally, since Jack's income to date exceeds the FUTA (Federal Unemployment Tax Act) and SUTA (State Unemployment Tax Act) income limits, these are not considered in the journal entry calculation.

Answer 2

Credit to Cash for $4,995 is correct

Step-by-step explanation:

here is a complete question

has a gross salary for May of $7,000. The entire amount is under the OASDI limit of $118,500 and thus subject to FICA. He is also subject to federal income tax at a rate of 21%. Which of the following is a part of the journal entry to record the disbursement of his net pay? (Assume a FICA-OASDI Tax of 6.2 % and FICA-Medicare Tax of 1.45%. Round the final answer to the nearest dollar.) A. debit to Cash for $4,995 B. debit to FICA Tax Payable of $4,995 O C. debit to Employee Income Tax Payable of $4,995 D. credit to Cash for $4,995

The computation of the amount that becomes the part for accrual the employer payroll taxes is shown below:

Gross Pay $7,000

Less: Deductions

Federal Income tax $1,470 ($7000 × 21%)

FICA-OASDI tax $434 ($7000 × 6.2%)

FICA-Medicare tax $102 ($7,000 × 1.45%)

Total Deductions 2006

Net pay $4,995