Neumann Consulting Group reports a $ 1,200,000 bi- weekly payroll. Neumann and its employees must pay Social Security taxes at a rate of 6.2%. Both are also responsible for Medicare taxes at a rate of 1.45%. Payroll income taxes average 20% for federal and 4% for state and local taxes. The company is also responsible for federal and state unemployment taxes. The federal unemployment tax rate is 1.6%. The state unemployment tax rate is 4.4% on a wage base of $ 7,000, but Neumann gets a 3.2% credit. Neumann has not paid any employee more than $ 7,000. None of the employees have exceeded the income base for FICA tax.
Required
a. Prepare the journal to record the bi- weekly payroll.
b. Prepare the journal entry to pay the liability for accrued salaries.
c. Prepare the journal entry necessary to record Neumann’s payroll tax expense for the bi- weekly payroll.