Ada Marion earns a salary of $7,500 per month during the year. FICA taxes are 7.65% on the first $117,000 of gross earnings. Federal unemployment insurance taxes are 6.2% of the first $7,000; however, a credit is allowed equal to the state unemployment insurance taxes of 5.4% on the $7,000. During the year, $25,600 was withheld for federal income taxes and $5,700 was withheld for state income taxes.
(a)Prepare a journal entry summarizing the payment of Ada’s total salary during the year.
(b)Prepare a journal entry summarizing the employer payroll tax expense on Ada’s salary for the year.
(c)Determine the cost of employing Grace for the year.
Massimini Company had the following payroll data for the year:
Gross earnings of employees$740,000
Employee earnings not subject to Social Security tax140,000
Employee earnings not subject to FUTA or SUTA tax490,000
Assuming the following:
FICA tax rate on first $117,0007.65% (1.45% over $117,000)
State Unemployment tax rate5.4%(SUTA)
Federal Unemployment tax rate.8%(FUTA)
Compute Massimini's payroll tax expense for the year. Make a summary journal entry to record the payroll tax expense.