Question

Ricardo's Mexican Restaurant incurred salaries expense of $62,000 for 2018. The payroll expense includes employer FICA tax, in addition to state unemployment fax and federal unemployment tax. Of the total salaries, $22,000 is subject to unemployment tax. Also, the company provides the following benefits for employees: health insurance (cost to the company, $3,000), life insurance (cost to the company, $330), and retirement benefits (cost to the company, 10% of salaries expense).
Requirements:
1. Journalize Ricardo's expenses for employee benefits and for payroll taxes. Explanations are not required.
2. What was Ricardo's total expense for 2018 related to payroll?

Answer 1

Answer:

1. Journalize Ricardo's expenses for employee benefits and for payroll taxes. Explanations are not required.

Assuming Ricardo has not yet paid the expenses:

XX, 2018, employee benefits and payroll tax expenses

Dr FICA tax (OASDI) expense 3,844

Dr FICA tax (Medicare) expense 899

Dr FUTA tax expense 132

Dr SUTA tax expense 1,188

Dr Worker health insurance 3,000

Dr Worker life insurance 330

Dr 401k plan 6,200

    Cr FICA tax (OASDI) payable 3,844

    Cr FICA tax (Medicare) payable 899

    Cr FUTA tax payable 132

    Cr SUTA tax payable 1,188

    Cr Worker health insurance payable 3,000

    Cr Worker life insurance payable 330

    Cr 401k plan payable 6,200

If Ricardo has already paid the expenses and benefits, you should only credit cash for $15,593

2. What was Ricardo's total expense for 2018 related to payroll?

$15,593 + $62,000 = $77,593

Explanation:

salaries expense $62,000

FICA taxes (OASDI) = $62,000 x 6.2% = $3,844

FICA taxes (Medicare) = $62,000 x 1.45% = $899

FUTA taxes = $22,000 x 0.6% = $132

SUTA taxes = $22,000 x 5.4% = $1,188

health insurance $3,000

life insurance $330

retirement benefits $6,200