Question

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $128,400 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 5.4% of the first $7,000 paid to its employee.

	Gross Pay through August 31					Gross Pay for September
a.		$	5,200				$	2,400
b.			2,350					2,450
c.			122,800					8,700

rev: 05_16_2019_QC_CS-168714

Compute BMX’s amounts for each of these four taxes as applied to the employee’s gross earnings for September under each of three separate situations (a), (b), and (c).(Round your answers to 2 decimal places.)

Assuming situation (a), prepare the employer’s September 30 journal entries to record salary expense and its related payroll liabilities for this employee. The employee’s federal income taxes withheld by the employer are $90 for this pay period.
Options for Federal Income Tax

• FICA—Medicare

• FICA—Social Security

• FUTA

• SUTA

OPtions for the General Journal

• Accounts payable

• Bonus payable

• Cost of goods sold

• Deferred income tax liability

• Earned services revenue

• Earned ticket revenue

• Employee benefits plan payable

• Employee bonus expense

• Employee federal income taxes payable

• Employee life insurance payable

• Employee medical insurance payable

• Employee union dues payable

• Estimated warranty liability

• Federal unemployment taxes payable

• FICA—Medicare taxes payable

• FICA—Social security taxes payable

• Income taxes expense

• Income taxes payable

• Interest expense

• Interest payable

• Merchandise inventory

• Notes payable

• Payroll taxes expense

• Repair parts inventory

• Salaries expense

• Salaries payable

• Sales

• Sales taxes payable

• State unemployment taxes payable

• Unearned services revenue

• Unearned ticket revenue

• Vacation benefits expense

• Vacation benefits payable

• Warranty expense

Assuming situation (a), prepare the employer’s September 30 journal entries to record the employer’spayroll taxes expense and its related liabilities.

Options for employer payroll Taxes

• FICA—Medicare

• FICA—Social Security

• FUTA

• SUTA

Options for General Journal

• Accounts payable

• Accrued payroll payable

• Bonus payable

• Cash

• Cost of goods sold

• Deferred income tax liability

• Earned services revenue

• Earned ticket revenue

• Employee benefits plan payable

• Employee bonus expense

• Employee federal income taxes payable

• Employee life insurance payable

• Employee medical insurance payable

• Employee union dues payable

• Estimated warranty liability

• Federal unemployment taxes payable

• FICA—Medicare taxes payable

• FICA—Social security taxes payable

• Income taxes expense

• Income taxes payable

• Interest expense

• Interest payable

• Merchandise inventory

• Notes payable

• Payroll taxes expense

• Repair parts inventory

• Salaries expense

• Salaries payable

• Sales

• Sales salaries expense

• Sales taxes payable

• State unemployment taxes payable

• Unearned services revenue

• Unearned ticket revenue

• Vacation benefits expense

• Vacation benefits payable

• Wages expense

• Warranty expense

Answer 1

Part A

Employer Payroll taxes	September earnings subject to tax	Tax Rate	Tax Amount
FICA-Social Security	$2400.00	6.20%	148.80
FICA-Medicare	2400.00	1.45%	34.80
FUTA	1800.00	0.60%	10.80
SUTA	1800.00	2.90%	52.20

7000-5200 = 1800

Part B

Employer Payroll taxes	September earnings subject to tax	Tax Rate	Tax Amount
FICA-Social Security	$2450.00	6.20%	151.90
FICA-Medicare	2450.00	1.45%	35.53
FUTA	2450.00	0.60%	14.70
SUTA	2450.00	2.90%	71.05

Part C

Employer Payroll taxes	September earnings subject to tax	Tax Rate	Tax Amount
FICA-Social Security	$5600.00	6.20%	347.20
FICA-Medicare	8700.00	1.45%	126.15
FUTA	0		0
SUTA	0		0

128400-122800 = 5600

Part D

Taxes to be withheld from gross pay (employee-paid taxes)
	September earnings subject to tax	Tax Rate	Tax Amount
Federal income tax			90
FICA-social security	$2400.00	6.20%	148.80
FICA – medicare	2400.00	1.45%	34.80
Total taxes withheld			$273.60

Date	General Journal	Debit	Credit
Sep. 30	Salaries expense	2400.00
	FICA—Social security taxes payable		148.80
	FICA—Medicare taxes payable		34.80
	Employee federal income taxes payable		90.00
	Salaries payable		2126.40

Part E

Employer Payroll taxes	September earnings subject to tax	Tax Rate	Tax Amount
FICA-Social Security	$2400.00	6.20%	148.80
FICA-Medicare	2400.00	1.45%	34.80
FUTA	1800.00	0.60%	10.80
SUTA	1800.00	2.90%	52.20
	Total payroll taxes expenses		$246.60

Date	General Journal	Debit	Credit
Sep. 30	Payroll taxes expense	246.60
	FICA—Social security taxes payable		148.80
	FICA—Medicare taxes payable		34.80
	Federal unemployment taxes payable		10.80
	State unemployment taxes payable		52.20