Cornerstone Exercise 8-26 (Algorithmic) Payroll Taxes

Hernandez Builders has a gross payroll for January amounting to $560,000. The following amounts have been withheld:

Federal income taxes	$71,000
Social Security	34,720
Medicare	8,120
Charitable contributions	1% of gross pay
Union dues	2% of gross pay

Also, the federal unemployment tax rate is 6.2%, and applies to all but $56,000 of the gross payroll.

Required:

1. What is the amount of net pay recorded by Hernandez?

2. Prepare the journal entries to record the payroll. If an amount box does not require an entry, leave it blank.

	Wages Expense
	Federal Income Taxes Withholding Payable
	Social Security Taxes Payable (Employee)
	Medicare Taxes Payable (Employee)
	Charitable Contributions Payable
	Union Dues Payable
	Cash
	(Record wages and liabilities)
	Federal Unemployment Taxes Expense
	Social Security Taxes Expense
	Medicare Taxes Expense
	Federal Unemployment Taxes Payable
	Social Security Taxes Payable (Employer)
	Medicare Taxes Payable (Employer)
	(Record employer payroll taxes)