Question

During January, a company incurs employee salaries of $2.6 million. Withholdings in January are $198,900 for the employee portion of FICA, $390,000 for federal income tax, $162,500 for state income tax, and $26,000 for the employee portion of health insurance (payable to Company B). The company incurs an additional $161,200 for federal and state unemployment tax and $78,000 for the employer portion of health insurance. Required: 1.-3. Record the necessary entries in the Journal Entry Worksheet below. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)

Answer 1

Answer:

The journal entries to record would be the following:

Jan-31                           Debit                              Credit

Salaries Expenses    $2,600,000

Income Tax payable ($390,000+$162,500)     $522,500

FICA Tax payable                                                $198,900

Accounts payable                                                $26,000

Salaries payable Balance                                     $1,822,600

Jan-31                         Debit                              Credit

Salaries Expenses    $78,000

Accounts payable                                           $78,000

Jan-31                         Debit                              Credit

Payroll Tax expense $360,100

FICA Tax Payable                                       $198,900

Unemployment Tax Payable                     $161,200

Explanation:

The journal entries to record would be the following:

To record employee salary expense and withholdings

Jan-31                           Debit                              Credit

Salaries Expenses    $2,600,000

Income Tax payable ($390,000+$162,500)     $522,500

FICA Tax payable                                                $198,900

Accounts payable                                                $26,000

Salaries payable Balance                                     $1,822,600

To record fringe benefit provided by employer

Jan-31                         Debit                              Credit

Salaries Expenses    $78,000

Accounts payable                                           $78,000

To record employer payroll taxes

Jan-31                         Debit                              Credit

Payroll Tax expense $360,100

FICA Tax Payable                                       $198,900

Unemployment Tax Payable                     $161,200