Payroll of Yellow Card Company

# Payroll of Yellow Card Company - The payroll of YellowCard...

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The payroll of YellowCard Company for September 2006 is as follows. Total payroll was \$480,000, of which \$110,000 is exempt fro mSocial Security tax because it represented amounts paid in excess of \$90,000 to certain employees. The amount paid to employees in excess of \$7,000 was \$400,000/ Omcp,e taxes om tje a,pimt pf \$80,000 were withheld, as was \$9,000 in union dues. The state unemployment tax is 3.5%, but YellowCard Company is allowed a credit of 2.3% by the state for it's unemployment experience. Also, assume that the current FICA tax is 7.65% on an employees wages to \$90,000 and 1.45% in excess of \$90,000. No employee for YellowCard makes more than \$125,000. The federal unemployment tax rate is 0.8% after state credit. Instructions: Prepare the necessary journal entries if the wages and salaries paid and the employer payroll taxes are recorde

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Unformatted text preview: Wages and Salaries Expense 480,000 Withholding Taxes Payable 80,000 FICA Taxes Payable* 29,900 Union Dues Payable 9,000 Cash 361,100 *[(\$480,000 - \$110,000) X 7.65% = \$28,305 \$110,000 is exempt so we do not \$110,000 X 1.45% = \$1,595; \$28,305 + \$1,595 = \$29,900 On the excess amount we pay tax Payroll Tax Expense 31,500 FICA Taxes Payable 29,900 (As calculated above) Federal Unemployment Tax Payable 640 FUTA is payable till 7,000 and so [(\$480,000 - \$400,000) X .8%) State Unemployment Tax Payable 960 [\$80,000 X (3.5% - 2.3%)] There is a credit of 2.3% and the a ed separately. Remit in excel t calculate the FICA tax on that x at 1.45% we subtract 400,000 which is for employees above 7,000 amount is 480,000-400,000=80,000 as written above for FUTA...
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• Spring '09
• WilliamWhitley
• Accounting, Federal Insurance Contributions Act tax, FUTA, YellowCard Company

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