Here is another question I am having trouble with, please help!!!!
3. The following totals for the month of March were taken from the payroll registrar of
the X company:
Salaries (all subject to social
security & Medicare taxes $14,000
Federal income taxes withheld 3,500
Medical insurance deductions 700
Life insurance deductions 400
Salaries subject to unemployment taxes 11,000
Medicare tax rate 1.45%
Social security tax rate 6.20%
Prepare journal entries to record the following. Round amounts to the nearest dollar.
To prepare the journal entries, we need to analyze the information given and determine the accounts affected and their respective amounts. Here's how we can approach each item:
1. Salaries (all subject to social security & Medicare taxes)
The total salaries of $14,000 are subject to social security and Medicare taxes. We need to calculate these taxes and record the entries accordingly.
- Social security tax: $14,000 * 6.20% = $868
- Medicare tax: $14,000 * 1.45% = $203
Now, we can prepare the journal entry:
Debit - Salaries Expense: $14,000
Debit - Social Security Taxes Payable: $868
Debit - Medicare Taxes Payable: $203
Credit - Cash: $14,000 + $868 + $203
2. Federal income taxes withheld
The amount for federal income taxes withheld is $3,500. This is an expense for the company and a liability for the employees.
Prepare the journal entry:
Debit - Salaries Expense: $3,500
Credit - Federal Income Taxes Payable: $3,500
3. Medical insurance deductions
The medical insurance deductions amount to $700. This is a reduction in the employee's salary and a liability for the company.
Prepare the journal entry:
Debit - Salaries Expense: $700
Credit - Medical Insurance Payable: $700
4. Life insurance deductions
The life insurance deductions are $400. Similar to medical insurance, this is a reduction in salary and a liability for the company.
Prepare the journal entry:
Debit - Salaries Expense: $400
Credit - Life Insurance Payable: $400
5. Salaries subject to unemployment taxes
The salaries subject to unemployment taxes are $11,000. This is an expense for the company and a liability for payroll taxes.
Prepare the journal entry:
Debit - Salaries Expense: $11,000
Credit - Unemployment Taxes Payable: $11,000
After preparing all the journal entries, you should review them and make sure they are accurate before recording them in the general ledger. As always, it's best to consult with an accountant or bookkeeper to ensure compliance with any applicable regulations and specific needs of the X company.