Question

Journalize Payroll Tax The payroll register of Chen Engineering Co. indicates $2,790 of social security withheld and $697.50 of Medicare tax withheld on total salaries of $46,500 for the period. Earnings of $13,000 are subject to state and federal unemployment compensation taxes at the federal rate of 0.6% and the state rate of 5.4%. Provide the journal entry to record the payroll tax expense for the period. If an amount box does not require an entry, leave it blank. Round to two decimal places.

Answer 1

Salary Expense at the time of booking:
	Dr.	Cr.
Salary Expenses Dr.	46,500.00
To Social Security Withheld payable		2,790.00
To Medicare Tax Withheld payable		697.50
To Federal Tax Withheld payable		78.00
To State Tax Withheld payable		702.00
Net Payroll Payable		42,232.50
(Being Salary expense incurred and taxes payable provision created)
Calculation of Federal and State Unemployment Tax:
Income eligible for such tax	13,000.00
Federal Tax Rate	0.60%
State Tax Rate	5.40%
Federal Tax = Income X Rate	78.00
State Tax = Income X Rate	702.00
Entry for Payment of Salary:
	Dr.	Cr.
Net Payroll Payable Dr.	42,232.50
To Cash		42,232.50
(Being payment of Salary made)
Entry for Payment of Taxes:
	Dr.	Cr.
Social Security Withheld payable	2,790.00
Medicare Tax Withheld payable	697.50
Federal Tax Withheld payable	78.00
State Tax Withheld payable	702.00
To Cash		4,267.50
(Being payment of taxes made)