ACC 205 Week 4 Exercise 1 Payroll accounting

1. Payroll accounting.Assume that the following tax rates and payroll information pertain to Brookhaven

Publishing:

Social Security taxes: 6% on the first $55,000 earned per employee

Medicare taxes: 1.5% on the first $130,000 earned per employee

Federal income taxes withheld from wages: $7,500

State income taxes: 4% of gross earnings

Insurance withholdings: 1% of gross earnings

State unemployment taxes: 5.4% on the first $7,000 earned per employee

Federal unemployment taxes: 0.8% on the first $7,000 earned per employee

The company incurred a salary expense of $50,000 during February. All employees had earned

less than $5,000 by month-end and no wages have been paid during the month.

a. Prepare the necessary entry to record Brookhaven’s February payroll. The entry will

include deductions for the following:

Social Security taxes

Medicare taxes

Federal income taxes withheld

State income taxes

Insurance

b. Prepare the journal entry to record Brookhaven’s payroll tax expense. The entry will

include the following:

Matching Social Security taxes

Matching Medicare taxes

State unemployment taxes

Federal unemployment taxes