Question

Required Information The following information applies to the questions displayed below 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 S Gross Pay for September $2,100 2,350 8,500 5,000 2,250 122,600 Assuming situation (a). prepare the employer's September 30 journal entries to record salary expense and its related payroll Babilities for this employee. The employee's federal income taxes withneld by the employer are $90 for this pay period es Complete this question by entering your answers in the tabs below. Taxes to be Withheld From Gross 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.) View transaction list View journal entry worksheet Credit General Journal Debit No. Date 2.100.00 Sep 30 Salanes expense 1 FICA Social secunty taxes payable FICA-Medicare taxes payable Employee federal income taxes cayabe Salanes payable Taxes to be Withheld From Orosa Pay

Answer 1

Taxes to be withheld from gross Pay (Employee – Paid Taxes)
	September earnings subject to tax (a)	Tax rate (b)	Tax Amount (a x b)
Federal Income tax			$90.00
FICA – Social Security tax	$2,100.00	6.20%	$130.20
FICA – Medicare tax	$2,100.00	1.45%	$30.45
Total taxes withheld			$250.65

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Journal entry to record salaries expense and its related payroll liabilities
Date	General Journal	Debit	Credit
Sept. 30	Salaries Expense	$2,100.00
	Employee Federal Income tax Payable		$90.00
	FICA - Social Security taxes Payable		$130.20
	FICA - Medicare taxes Payable		$30.45
	Salaries Payable               [Gross Salary – Deductions = $2,100 - $90 - $130.20 - $30.45]		$1,849.35
	(To record accrued salaries and related payroll liabilities)

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Note: 1 - FICA Social Security's tax FICA - social security tax is payable on maximum wages of $128,400. Once an employee's year to date earnings or cumulative earnings exceed the wage base of $128.400, no additional Social Security tax is to be withheld from the employee's earnings. So, before calculating the FICA - social security tax, we have to check whether the September earnings along with cumulative earnings until August is exceeding $128,400 or not. If September earnings + cumulative earnings until August is exceeding $ 128,400, then Social Security tax= [($128,400 - Cumulative earnings until August) or gross salary whichever is lesser] x 6.20%. and if it is not, then Social Security tax = Gross pay during September x 6.20% Note 2 - FICA - Medicare tax Medicare tax is always payable on gross pay. Medicare tax = Gross pay x 1.45%

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Note 3 - FUTA and SUTA taxes *To be paid by employer only. *Maximum salary subject to FUTA tax & SUTA tax is $7,000. FUTA tax If September earnings + cumulative earnings until August is exceeding $7,000, then FUTA tax= [($7,000 - Cumulative earnings until August) or gross salary whichever is lesser] x 0.6%. and if it is not, then FUTA tax = Gross pay during September x 0.6% SUTA tax: If September earnings + cumulative earnings until August is exceeding $7,000, then SUTA tax = [($7,000 - Cumulative earnings until August) or gross salary whichever is lesser] x 5.40%. and if it is not, then SUTA tax = Gross pay during September x 5.40% Once an employee's year to date earnings exceed the wage base of $7.000, no additional FUTA tax & SUTA would be payable by employer.