Question

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $117,000 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid to its employee.

Gross Pay through August Gross Pay for September
a. $6,440 $805

Prepare the employer's September 30 journal entries to record the employer's payroll taxes expense and its related liabilities. (Round your answers to 2 decimal places.)

Answer 1

Answer:

wages expense 805 debit

     medicare            11.67    credit

     social security    49.91   credit

     wages payable  743.42 credit

--to record wages for employees--

payroll expense 81.182 debit

      income tax payable  11.67 credit

      FICA payable            49.91 credit

      SUTA payable           16.24 credit

      FUTA payable             3.36 credit

--to record payroll expense for the month--

Explanation:

before week wages acc wages

6440        805           7245

As we are above the celling for SUTA and FUTA we will compare the before accumulated wages and the celling to know the tax amount.

For medicare and SS we aren't above celling so we should calculate for the full wages.

 Medicare         SS

  11.6725    49.91

805 x 1.45%  805 x 6.2%    

         SUTA                 FUTA

          16.24                  3.36

(7000-6440)x0.029  (7000-6440)x0.006