Question

Widmer Company had gross wages of $301,000 during the week ended June 17. The amount of wages subject to social security tax was $270,900, while the amount of wages subject to federal and state unemployment taxes was $38,000. Tax rates are as follows:

Social security 6.0%
Medicare 1.5%
State unemployment 5.4%
Federal unemployment 0.8%

The total amount withheld from employee wages for federal taxes was $60,200.

If an amount box does not require an entry, leave it blank. If required, round answers to two decimal places.

a. Journalize the entry to record the payroll for the week of June 17.
June 7

b. Journalize the entry to record the payroll tax expense incurred for the week of June 17.
June 7

Answer 1

Widmer Company

a. Journal Entry:

Debit Payroll Expense $301,000

Credit Payroll Payable $218,728.50

Credit Payroll Tax Payable $82,271.50

To record the payroll for Week June 17.

b. Journal Entry to record payroll tax expense

Debit Payroll Tax Payable $82,271.50

Credit Cash $82,271.50

To record the payroll tax expense incurred for Week June 17.

Step-by-step explanation:

a) Data and Calculations:

Gross wages = $301,000

Period = Week ended June 17

Wages subject to social security tax = $270,900

Social security tax rate = 6%

Social security tax = 6% of $270,900 = $16,254

Medicare tax rate = 1.15%

Medicare tax = 1.15% of $301,000 = $3,461.50

State unemployment rate = 5.4%

Federal unemployment rate = 0.8%

Wages subject to federal and state unemployment taxes = $38,000

State unemployment tax = 5.4% of $38,000 = $2,052

Federal unemployment tax = 0.8% of $38,000 = $304

Federal tax withheld = $60,200

Gross wages = $301,000

Social security tax = $16,254

Medicare tax = $3,461.50

State unemployment tax = $2,052

Federal unemployment tax = $304

Federal tax withheld = $60,200

Total tax and deductions = $82,271.50

Net pay = $218,728.50