Response to the following problem:
Palmer Company's first weekly pay period of the year ends on January 8. On that date, the column totals in Palmer's payroll register indicate its sales employees earned $69,490, its office employees earned $42,450, and its delivery employees earned $2,060. The employees are to have withheld from their wages FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $17,250 of federal income taxes, $2,320 of medical insurance deductions, and $275 of union dues. No employee earned more than $7,000 in the first pay period.
Required:
1. Calculate FICA Social Security taxes payable and FICA Medicare taxes payable. Prepare the journal entry to record Palmer Company's January 8 (employee) payroll expenses and liabilities.
2. Prepare the journal entry to record Palmer's (employer) payroll taxes resulting from the January 8 payroll. Palmer's merit rating reduces its state unemployment tax rate to 3.4% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.8%.