Question

MLS Company has five employees, each of whom earns $ 1,600 per month and is paid on the last day of each month. All five have been employed continuously at this amount since January 1. MLS uses a payroll bank account and special payroll checks to pay its employees. On June 1, the following accounts and balances exist in its general ledger:
a. FICA—Social Security Taxes Payable, $ 992; FICA—Medicare Taxes Payable, $232. (The balances of these accounts represent total liabilities for both the employer’s and employees’ FICA taxes for the May payroll only.)
b. Employees’ Federal Income Taxes Payable, $1,050 (liability for May only).
c. Federal Unemployment Taxes Payable, $ 88 ( liability for April and May together).
d. State Unemployment Taxes Payable, $ 440 (liability for April and May together). During June and July, the company had the following payroll transactions.
June 15 Issued check payable to Security Bank, a federal depository bank authorized to accept employers’ payments of FICA taxes and employee income tax withholdings. The $ 2,274 check is in payment of the May FICA and employee income taxes.
30 Recorded the June payroll and transferred funds from the regular bank account to the payroll bank account. Issued checks payable to each employee in payment of the June payroll. The payroll register shows the following summary totals for the June pay period.


30 Recorded the employer’s payroll taxes resulting from the June payroll. The company has a merit rating that reduces its state unemployment tax rate to 4.0% of the first $ 7,000 paid each employee. The federal rate is 0.8%.
July 15 Issued check payable to Security Bank in payment of the June FICA and employee income taxes.
15 Issued check to the State Tax Commission for the April, May and June state unemployment taxes. Mailed the check and the second quarter tax return to the State Tax Commission.
31 Issued check payable to Security Bank in payment of the employer’s FUTA taxes for the first quarter of the year.
31 Mailed Form 941 to the IRS, reporting the FICA taxes and the employees’ federal income tax withholdings for the second quarter.

Required
Prepare journal entries to record the transactions and events for both June andJuly.


$1.99
Sales1
Views134
Comments0
  • CreatedNovember 26, 2013
  • Files Included
Post your question
5000