Problem
On January 8, the end of the first weekly pay period of the year, Royal Company's payroll register showed that its employees earned $27,760 of office salaries and $60,840 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes at the rate of 6.20%, FICA Medicare taxes at the rate of 1.45%, $13,060 of federal income taxes, $1,450 of medical insurance deductions, and $780 of union dues. No employee earned more than $7,000 in this first period.
Required:
1.1 Calculate FICA Social Security taxes payable and FICA Medicare taxes payable by the employees of Royal Company.
1.2 Prepare the journal entry to record Royal Company's January 8 (employee) payroll expenses and liabilities.
2. Prepare the journal entry to record Royal's (employer) payroll taxes resulting from the January 8 payroll. Royal's merit rating reduces its state unemployment tax rate to 2% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.8%.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.