According to a summary of the payroll of Sinclair Company, $505,000 was subject to the 6.0% social security tax and $545,000 was subject to the 1.5% Medicare tax. Also, $10,000 was subject to state and federal unemployment taxes. Required: 1. Calculate the employer's payroll taxes using the following rates: State unemployment, 4.2%; Federal unemployment, 0.8%. $ 2. Journalize the entry to record the accrual of the employer's payroll taxes. If an amount box does not require an entry, leave it blank.

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Business

Viviana Davila

6 March, 08:21

According to a summary of the payroll of Sinclair Company, $505,000 was subject to the 6.0% social security tax and $545,000 was subject to the 1.5% Medicare tax. Also, $10,000 was subject to state and federal unemployment taxes. Required: 1. Calculate the employer's payroll taxes using the following rates: State unemployment, 4.2%; Federal unemployment, 0.8%. $ 2. Journalize the entry to record the accrual of the employer's payroll taxes. If an amount box does not require an entry, leave it blank.

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Alexis Burns · Answer 1

1. The computation is shown below:

State unemployment = $10,000 * 4.2% = $420

Federal unemployment = $10,000 * 0.8% = $80

2. The journal entry is shown below:

Payroll tax expense A/c Dr $38,975

To Social security tax A/c $30,300 ($505,000 * 6.0%)

To Medicate tax A/c $8,175 ($545,000 * 1.5%)

To State Unemployment tax payable A/c $420

To Federal Unemployment tax payable A/c $80

(Being the payroll tax expense is recorded)