Below is a payroll sheet for Mahogany Company for the month of July. The company is allowed a 1% unemployment compensation rate by the state; the federal unemployment tax rate is 0.8% and the maximum for both is $7,000. Assume a 10% federal income tax rate for all employees and a 7.65% FICA tax on employee and employer on a maximum of $106,800. In addition, 1.45% is charged both employer and employee for an employee’s wages in excess of $106,800 per employee.
Name
Earnings
to June. 30
July
Earnings
Income
Tax
Withholding FICA SUTA FUTA
Jerry Kaye $ 75,000 $ 15,000
Jessie Randle 104,000 17,000
Javier White 6,000 800
Jeremy Taggle 125,000 21,000
John Jay 42,500 7,100
Joan Short 3,600 1,500
Instructions
(a) Complete the payroll sheet and make the necessary entry to record the payment of the payroll.
(b) Make the entry to record the payroll tax expenses of Mahogany Company.
(c) Make the entry to record the payment of the payroll liabilities created. Assume that the company pays all payroll liabilities at the end of each month.