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.

 Exercise 9-5 Computing payroll taxes LO P2, P3

 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.)

 Exercise 9-6 Payroll-related journal entries LO P2

 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 $60 for this pay period.

 Exercise 9-7 Payroll-related journal entries LO P3

 Assuming situation (a), prepare the employer's September 30 journal entries to record the employer's payroll taxes expense and its

 related liabilities.

Answer 1

a)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	1700	6.20%	105.40
FICA-Medicare	1700	1.45%	24.65
FUTA	600	0.60%	3.60
SUTA	600	5.40%	32.40
b)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	3050	6.20%	189.10
FICA-Medicare	3050	1.45%	44.23
FUTA	3050	0.60%	18.30
SUTA	3050	5.40%	164.70
c)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	4400	6.20%	272.80
FICA-Medicare	9900	1.45%	143.55
FUTA	0	0.60%	0.00
SUTA	0	5.40%	0.00
Note: Earnings taxable for FUTA and SUTA in (a) = 7000-6400 = $600
Note: Earnings taxable for Social Security in (c) = 128400-124000 = $4400
2
Taxes to be Withheld From Gross Pay (Employee-Paid Taxes)
	September Earnings Subject to Tax	Tax Rate	Tax Amount
Federal income tax			60.00
FICA—Social Security	1700	6.20%	105.40
FICA—Medicare	1700	1.45%	24.65
Total taxes withheld			190.05
Date	General Journal	Debit	Credit
Sep 30	Salaries expense	1700.00
	FICA—Social Security taxes payable		105.40
	FICA—Medicare taxes payable		24.65
	Employee federal income taxes payable		60.00
	Salaries payable		1509.95
3
Employer Payroll taxes	September earnings subject to tax	Tax Rate	Tax Amount
FICA-Social Security	1700	6.20%	105.40
FICA-Medicare	1700	1.45%	24.65
FUTA	600	0.60%	3.60
SUTA	600	5.40%	32.40
Total Payroll Taxes Expense			166.05
Date	General Journal	Debit	Credit
Sep. 30	Payroll taxes expense	166.05
	FICA—Social security taxes payable		105.40
	FICA—Medicare taxes payable		24.65
	Federal unemployment taxes payable		3.60
	State unemployment taxes payable		32.40

Answer 2

(a)	FICA—Social Security	$	2,100	6.20	%	$	130.20	Full amount is subject to tax.
	FICA—Medicare		2,100	1.45	%		30.50	Full amount is subject to tax.
	FUTA		2,000	0.60	%		12.00	$100 is over the maximum.
	SUTA		2,000	5.40	%		108.00	$100 is over the maximum.
(b)	FICA—Social Security	$	2,350	6.20	%	$	145.70	Full amount is subject to tax.
	FICA—Medicare		2,350	1.45	%		34.08	Full amount is subject to tax.
	FUTA		2,350	0.60	%		14.10	Full amount is subject to tax.
	SUTA		2,350	5.40	%		126.90	Full amount is subject to tax.
(c)	FICA—Social Security	$	5,800	6.20	%	$	359.60	$2,700 is over the maximum.
	FICA—Medicare		8,500	1.45	%		123.25	Full amount is subject to tax.
	FUTA		0	0.60	%		0.00	Full amount is over maximum.
	SUTA		0	5.40	%		0.00	Full amount is over maximum.

Answer 3

• Taxes to be Withheld From Gross Pay

• General Journal

The employee’s federal income taxes withheld by the employer are $90 for this pay period. Prepare the employer’s September 30 journal entries to record salary expense and its related payroll liabilities for this employee. (Round your answers to 2 decimal places.)

No	Date	General Journal	Debit	Credit
1	Sep 30	Salaries expenseselected answer correct	2,100.00selected answer correct	not attempted
		FICA—Medicare taxes payableselected answer correct	not attempted	30.45selected answer correct
		FICA—Social security taxes payableselected answer correct	not attempted	130.20selected answer correct
		Employee federal income taxes payableselected answer correct	not attempted	90.00selected answer correct
		Salaries payableselected answer correct	not attempted	1,849.35selected answer correct

•