McLaughlin Manufacturing has the following data available for its March 31, 2019, payroll:
Wages earned ......................................................... $1,250,000*
Federal income taxes withheld............................................ 180,600
* All subject to Social Security and Medicare matching and withholding at 6.2% and 1.45%, respectively.
Federal unemployment taxes of 0.50% and state unemployment taxes of 0.80% are payable on the first $1,000,000.
Required:
1. Compute the taxes payable and wages that will be paid to employees. Then prepare the journal entries to record the wages earned and the payroll taxes.
2. McLaughlin Manufacturing would like to hire a new employee at a salary of $80,000. Assuming payroll taxes are as described above (with unemployment taxes paid on the first $7,000) and fringe benefits (e.g., health insurance, retirement, etc.) are 28% of gross pay, what will be the total cost of this employee for McLaughlin?