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30 September, 00:03

Ricardo's Mexican Restaurant incurred salaries expense of $62,000 for 2018. The payroll expense includes employer FICA tax, in addition to state unemployment fax and federal unemployment tax. Of the total salaries, $22,000 is subject to unemployment tax. Also, the company provides the following benefits for employees: health insurance (cost to the company, $3,000), life insurance (cost to the company, $330), and retirement benefits (cost to the company, 10% of salaries expense).

Requirements:

1. Journalize Ricardo's expenses for employee benefits and for payroll taxes. Explanations are not required.

2. What was Ricardo's total expense for 2018 related to payroll?

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Answers (1)
  1. 30 September, 00:19
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    1. Journalize Ricardo's expenses for employee benefits and for payroll taxes. Explanations are not required.

    Assuming Ricardo has not yet paid the expenses:

    XX, 2018, employee benefits and payroll tax expenses

    Dr FICA tax (OASDI) expense 3,844

    Dr FICA tax (Medicare) expense 899

    Dr FUTA tax expense 132

    Dr SUTA tax expense 1,188

    Dr Worker health insurance 3,000

    Dr Worker life insurance 330

    Dr 401k plan 6,200

    Cr FICA tax (OASDI) payable 3,844

    Cr FICA tax (Medicare) payable 899

    Cr FUTA tax payable 132

    Cr SUTA tax payable 1,188

    Cr Worker health insurance payable 3,000

    Cr Worker life insurance payable 330

    Cr 401k plan payable 6,200

    If Ricardo has already paid the expenses and benefits, you should only credit cash for $15,593

    2. What was Ricardo's total expense for 2018 related to payroll?

    $15,593 + $62,000 = $77,593

    Explanation:

    salaries expense $62,000

    FICA taxes (OASDI) = $62,000 x 6.2% = $3,844

    FICA taxes (Medicare) = $62,000 x 1.45% = $899

    FUTA taxes = $22,000 x 0.6% = $132

    SUTA taxes = $22,000 x 5.4% = $1,188

    health insurance $3,000

    life insurance $330

    retirement benefits $6,200
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