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
Medicare taxes: 1.5% on the first $130,000 earned
Federal income taxes withheld from wages: $7,500
State income taxes: 5% of gross earnings
Insurance withholdings: 1% of gross earnings
State unemployment taxes: 5.4% on the first $7,000 earned
Federal unemployment taxes: 0.8% on the first $7,000 earned
The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end.
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 withholdings
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