The payroll of YellowCard Company for September 2025 is as follows. Total payroll was $480,000, of which
Question:
The payroll of YellowCard Company for September 2025 is as follows.
Total payroll was $480,000, of which $110,000 is exempt from Social Security tax because it represented amounts paid in excess of $142,800 to certain employees. The amount paid to employees in excess of $7,000 (the maximum for both federal and state unemployment taxes) was $400,000. Income taxes in the amount of $80,000 were withheld, as was $9,000 in union dues. The state unemployment tax is 3.5%, but YellowCard Company is allowed a credit of 2.3% by the state for its unemployment experience. Also, assume that the current FICA tax is 7.65% on an employee’s wages to $142,800 and 1.45% in excess of $142,800. The federal unemployment tax rate is 0.8% after state credit.
Instructions
Prepare the necessary journal entries if the wages and salaries paid and the employer payroll taxes are recorded separately.
Step by Step Answer:
Intermediate Accounting
ISBN: 9781119790976
18th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield