Determining the total payroll taxes


Response to the following problem:

Mooney Labs had the following payroll for the week ended February 28:

Salaries                                                         Deductions

Technicians' salaries     $6,955.00             Federal income tax withheld       $1,145.00

Office salaries               2,260.00              Social Security tax withheld        387.03

Total                          $9,215.00              Medicare tax withheld                133.62

                                                               Charity withheld                       165.00

                                                                       Total                              $1,830.65

Assumed tax rates are as follows:

a. FICA: Social Security (employer) 6.2 percent (0.062) and (employee) 4.2 percent (0.042) on the first $106,800 for each employee and Medicare, 1.45 percent (0.0145) on all earnings for each employee.

b. State unemployment tax, 5.4 percent (0.054) on the first $7,000 for each employee.

c. Federal unemployment tax, 0.6 percent (0.006) on the first $7,000 for each employee.

Required:

Record the following entries in general journal form:

1. The payroll entry as of February 28.

2. The entry to record the employer's payroll taxes as of February 28 assuming that the total payroll is subject to the FICA taxes (combined Social Security and Medicare) and that $5,490 is subject to unemployment taxes.

3. The payment to the employees on March 2. (Assume that the company has transferred cash to Cash-Payroll Bank Account for this payroll.)

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Taxation: Determining the total payroll taxes
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