On January 8, the end of the first weekly pay period of the year, Regal Company’s payroll register showed that its employees earned $27,760 of office salaries and $70,240 of sales salaries. Withholdings from the employees’ salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $13,360 of federal income taxes, $1,350 of medical insurance deductions, and $840 of union dues. No employee earned more than $7,000 in this first period.
Required
1. Calculate FICA Social Security taxes payable and FICA Medicare taxes payable. Prepare the journal entry to record Regal Company’s January 8 (employee) payroll expenses and liabilities.
2. Prepare the journal entry to record Regal’s (employer) payroll taxes resulting from the January 8 payroll. Regal’s merit rating reduces its state unemployment tax rate to 5% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.8%.