Sophia is also responsible for accounting for HHEC.coms payroll. Over the past year, HHEC.com has doubled its
Question:
Sophia is also responsible for accounting for HHEC.com’s payroll. Over the past year, HHEC.com has doubled its workforce. As a result, Sophia wants to make sure that she is deducting the appropriate amount of taxes from the employees’ paychecks and that HHEC.com is paying the correct amount of payroll taxes. She gives you HHEC.com’s summary payroll data at the end of Year 3 along with payroll tax information (Social Security, Medicare, state unemployment, and federal unemployment). She then asks you to prepare the summary journal entry at December 31 for the full year’s payroll and then make the adjusting entry to record HHEC.com’s payroll taxes.
HHEC.Com has numerous employees who are paid on a weekly basis. Payroll information for the most recent week ending November 12th is given below:
| Employee compensation | 135,000 |
| Charitable contributions - United Way | 2,225 |
| FICA tax rate | 8.0% |
| Federal unemployment tax rate0.8% | 0.8% |
| State unemployment tax rate | 5.4% |
| Federal Income tax rate | 25.0% |
Of the total employee compensation, $135,000 is subject to the FICA tax and $48,500 is subject to the unemployment taxes. HHEC deducts employee charitable contributions for the United Way.
