Response to the following problem:
The following information about the payroll for the week ended July 17 was obtained from the records of Anaconda Mining Co.:
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Salaries:
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Deductions:
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Sales salaries
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$315,000
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Income tax withheld
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$98,000
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Warehouse salaries
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185,000
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U.S. savings bonds
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15,000
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CEO salaries
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125,000
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Group insurance
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12,500
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$625,000
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Tax rates assumed:
FICA tax, 7.5% of employee annual earnings State unemployment (employer only), 4.2% Federal unemployment (employer only), 0.8%
Instructions
1. For the July 17 payroll, determine the employee FICA tax payable.
2. Illustrate the effect on the accounts and financial statements of paying and recording the July 17 payroll.
3. Determine the following amounts for the employer payroll taxes related to the July 17 payroll: (a) FICA tax payable, (b) state unemployment tax payable, and (c) federal unemployment tax payable.
4. Illustrate the effect on the accounts and financial statements of recording the liability for the July 17 payroll taxes.