Question

Question On January 8, the end of the first weekly pay period of the year, Regis Company’s payroll register showed

that its employees earned \(22,760 of office salaries and \)65,840 of sales salaries. Withholdings from the

employees’ salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the

rate of 1.45%, \(12,860 of federal income taxes, \)1,340 of medical insurance deductions, and \(840 of

union dues. No employee earned more than \)7,000 in this first period.

Required

1. Calculate FICA Social Security taxes payable and FICA Medicare taxes payable. Prepare the journal

entry to record Regis Company’s January 8 (employee) payroll expenses and liabilities. (Round

amounts to cents.)

2. Prepare the journal entry to record Regis’s (employer) payroll taxes resulting from the January 8 payroll.

Regis’s merit rating reduces its state unemployment tax rate to 4% of the first $7,000 paid each

employee. The federal unemployment tax rate is 0.6%. (Round amounts to cents.)

Short answer

Answer

1. Social security taxes is $5,493.2
2. The payroll expense of the company is $12,093.90

Step-by-step solution

Calculation of social security taxes and Medicare taxes payable

$$\begin{gathered} \text{FICASocialSecuritytaxes} \\ \mathbf{\text{SocialSequrityTaxes=Totalsalaries×Taxrate}} \\ \mathbf{\text{=\$88,600×6.2\%}} \\ \mathbf{\text{=5.493.2}} \\ \text{FICAMedicaretaxes} \\ \mathbf{\text{MedicareTaxes=Totalsalaries×Taxrate}} \\ \mathbf{\text{=\$88,600×45\%}} \\ \mathbf{\text{=1284.7}} \end{gathered}$$

Date	Particulars	Debit	Credit
January 8	Office Salaries Expense	$65,840
	Sales Salaries Expense	$22,760
	FICA Social Security Tax Payable		$5,493.20
	FICA Medicare Taxes Payable		$1,284.7
	Federal Income Taxes Payable		$12,860
	Employee Medical Insurance Payable		$1,340
	Employees Union Dues Payable		$840
	Salaries Payable		$66,782.10
	(Being entry to record the payroll expenses and liabilities)

Journal entry for payroll expense

Date	Particulars	Debit	Credit
January 8	Payroll Taxes Expense	$12,093.90
	FICA Social Security Tax Payable		$5,493.20
	FICA Medicare Taxes Payable		$1,284.7
	State Unemployment Tax Payable		$
	Federal Unemployment Tax Payable		$1,772
	(Being entry to record payroll payroll expenses)