Payroll and Payroll Taxes Bailey Dry Cleaners has 6 employees who were paid the following wages during
Question:
Payroll and Payroll Taxes Bailey Dry Cleaners has 6 employees who were paid the following wages during 2013:
The state allows the company a 1% unemployment compensation merit-rating reduction from the normal rate of 5.4%. The federal unemployment rate is 0.6%. The maximum unemployment wages per employee are $7,000 for both the state and the federal government. Income tax withholdings of 20% are applied to all employees. A F.I.C.A. tax rate of 6% on the employee and 8% on the employer is applied to the first $100,000 of each employee’s wages.
Required:
1. Calculate the amount of payroll taxes to be paid by Bailey.
2. Prepare the journal entries to record the payment of payroll and the payroll tax expense.
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones