Question

During January, Luxury Cruise Lines incurs employee salaries of $1.1 million. Withholdings in January are $84,150 for the employee portion of FICA, $165,000 for federal income tax, $68,750 for state income tax, and $11,000 for the employee portion of health insurance (payable to Blue Cross Blue Shield). The company incurs an additional $68,200 for federal and state unemployment tax and $33,000 for the employer portion of health insurance. Record the necessary entries in the Journal Entry

Answer 1

Answer:

Explanation:

The journal entries are shown below:

1. Salary expense A/c Dr $1,100,000

             To income tax payable A/c $233,750

             To FICA Tax payable A/c    $84,150

             To Accounts payable A/c    $11,000

             To Salaries payable A/c       $771,100

(Being the expenses and Withholding are recorded and the remaining balance is credited to salary payable account)

2. Salary expense A/c Dr $33,000

         To Accounts payable A/c    $33,000

(Being the employer portion of health insurance is recorded)

3. Payroll tax expense A/c Dr $152,350

      To FICA Tax payable A/c    $84,150

      To Unemployment tax payable A/c $68,200

(Being payroll tax expense is recorded)

Answer 2

Assuming  $33,000 is for the employer portion of health insurance. The appropriate journal entries to record the transactions are:

Debit Salary expense $1,100,000

Credit Income tax payable $233,750

Credit FICA Tax payable     $84,150

Credit  Accounts payable   $11,000

Credit Salaries payable       $771,100

Journal entries

1.  Luxury Cruise LinesJournal entry

Debit Salary expense $1,100,000

Credit Income tax payable $233,750

($68,750+$165,000)

Credit FICA Tax payable     $84,150

Credit  Accounts payable   $11,000

Credit Salaries payable       $771,100

($1,100,000-$233,750-$84,150-$11,000)

2. Debit Salary expense $33,000

Credit  Accounts payable   $33,000

3. Debit Payroll tax expense $152,350

($84,150+$68,200)

Credit  FICA Tax payable   $84,150

Credit  Unemployment tax payable $68,200

Inconclusion the appropriate journal entries to record the transactions are:Debit Salary expense $1,100,000;Credit Income tax payable $233,750.

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