Question

According to a summary of the payroll of Scotland Company, $450,000 was subject to the 6.0% social security tax and $500,000 was subject to the 1.5% Medicare tax. Federal income tax withheld was $98,000. Also, $15,000 was subject to state (4.2%) and federal (0.8%) unemployment taxes. The journal entry to record accrued salaries would include a

Answer 1

Answer: See explanation

Explanation:

The journal entry to record accrued salaries would be calculated thus:

Dr FICA expenses $34500

Dr Federal unemployment tax $120

Dr State unemployment tax $630

Cr FICA tax payable $34500

Cr Federal unemployment tax payable $120

Cr State unemployment tax payable $630

Note:

Social security tax = $450000 × 6% = $27000

Medicare tax = $500000 × 1.5% = $7500

FICA tax = $27000 + $7500 = $34500

Federal unemployment tax = $15000 × 0.8% = $120

State unemployment tax = $15000 × 4.2% = $630