Sample Problem
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Sample Problem
Chapter 11
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Computing and recording employer’s payroll tax expense. The payroll register of Clifton’s Automotive and Detail Repair Shop showed total employee earnings of $2,890 for the week ended April 8, 2007.INSTRUCTIONS1.Compute the employer’s payroll taxes for the period. The tax rates are as follows:
2.Prepare a general journal entry to record the employer’s payroll taxes for the period.Analyze: If the FUTA tax rate had been 1.2 percent, what total employer payroll taxes would have been recorded?
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Computing employer’s payroll tax expense
1. Compute the employer’s payroll taxes for the period. The tax rates are as follows:
Social security 6.2% x $2,890 = 179.18Medicare 1.45% x $2,890 = 41.91FUTA 0.8% x $2,890 = 23.12SUTA 2.2 % x $2,890 = 63.58
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Recording employer’s payroll tax expense
The general journal entry would be:
Payroll tax expense 307.79Social security tax payable 179.18Medicare tax payable 41.91Federal Unemployment tax payable 23.12State Unemployment tax payable 63.58
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Analyze
If the FUTA tax rate had been 1.2%, the total employers payroll taxes would have been $319.35.
$2,890 x 1.2% = 34.68 34.68+179.18+41.91+63.58=319.35