6. Morris Company has wages of $800,000, federal withholding is 25%, state withholding is 3.4%, and FICA withholding is 7.65%. What is the journal entry to record these wages?
To record the journal entry for Morris Company's wages, we need to consider the different components of the wages and their respective withholdings.
1. Start by calculating the federal withholding amount. Multiply the wages by the federal withholding rate, which is 25%:
Federal withholding = $800,000 * 0.25 = $200,000
2. Next, calculate the state withholding amount. Multiply the wages by the state withholding rate, which is 3.4%:
State withholding = $800,000 * 0.034 = $27,200
3. Then, calculate the FICA withholding amount. Multiply the wages by the FICA withholding rate, which is 7.65%:
FICA withholding = $800,000 * 0.0765 = $61,200
4. Now, we can record the journal entry using the following accounts:
- Wages Expense (debit): $800,000
- Federal Withholding Payable (credit): $200,000
- State Withholding Payable (credit): $27,200
- FICA Withholding Payable (credit): $61,200
The journal entry would look like this:
Wages Expense $800,000
Federal Withholding Payable $200,000
State Withholding Payable $27,200
FICA Withholding Payable $61,200
Please note that this is a simplified example and does not take into account any other payroll liabilities or taxes. It is always recommended to consult with an accountant or tax professional for accurate and specific guidance regarding payroll journal entries.