EX 11-11 Payroll tax entries

According to a summary of the payroll of Bailik Co., $880,000 was subject to the 6.0% social security tax and the 1.5% Medicare tax. Also, $40,000 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.


Answer:

a. Social security tax (6% × $880,000)………………………………………………… $52,800
Medicare tax (1.5% × $880,000)……………………………………………………… 13,200
State unemployment tax (5.4% × $40,000)………………………………………… 2,160
Federal unemployment (0.8% × $40,000)………………………………………… 320
$68,480
b.
 Payroll Tax Expense 68,480
Social Security Tax Payable 52,800
Medicare Tax Payable 13,200
State Unemployment Tax Payable 2,160
Federal Unemployment Tax Payable 320