Assume that the following tax rates and payroll information pertain to Brookhaven Publishing:
- Social Security taxes: 4% on the first $55,000 earned per employee
- Medicare taxes: 1.5% on the first $130,000 earned per employee
- Federal income taxes withheld from wages: $7,500
- State income taxes: 4% of gross earnings
- Insurance withholdings: 1% of gross earnings
- State unemployment taxes: 5.4% on the first $7,000 earned per employee
- Federal unemployment taxes: 0.8% on the first $7,000 earned per employee
The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end and no wages have been paid during the month.
a. Prepare the necessary entry to record Brookhaven's February payroll. The entry will include deductions for the following:
- Social Security taxes
- Medicare taxes
- Federal income taxes withheld
- State income taxes
- Insurance withholdings
b. Prepare the journal entry to record Brookhaven's payroll tax expense. The entry will include the following:
- Matching Social Security taxes
- Matching Medicare taxes
- State unemployment taxes
Federal unemployment taxes