Adam earns a salary of $7,500 per month during the year. FICA taxes are 8% on the first $100,000 of gross earnings. Federal unemployment insurance taxes are 6.2% of the first $7,000; however, a credit is allowed equal to the state unemployment insurance taxes of 5.4% on the $7,000. During the year, $25,600 was withheld for federal income taxes and $5,700 was withheld for state income taxes.
Instructions
(a) Prepare a journal entry summarizing the payment of Adam's total salary during the year.
(b) Prepare a journal entry summarizing the employer payroll tax expense on Adam's salary for the year.
(c) Determine the cost of employing Adam for the year.