During January Luxury Cruise Lines incurs employee salaries

During January, Luxury Cruise Lines incurs employee salaries of $1.2 million. Withholdings in January are $91,800 for the employee portion of FICA, $180,000 for federal income tax, $75,000 for state income tax, and $12,000 for the employee portion of health insurance (payable to Blue Cross/Blue Shield). The company incurs an additional $74,400 for federal and state unemployment tax and $36,000 for the employer portion of health insurance. Required: 1., 2.& 3. Record the necessary entries in the Journal Entry Worksheet below. (If no entry is required for a transaction/event, select \"No journal entry required\" in the first account field. Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)

Solution

1.

Debit.... Salaries Expense..... $1,200,000

Credit.... FICA Payable.... $91,800

Credit..... Federal Income Tax Withholding Payable... $180,000

Credit .... State Income Tax Withholding Payable..... $75,000

Credit ....Health Insurance Payable ....$12,000

Credit... Salaries Payable ....$841,200

2.

Debit... Payroll Tax Expense..... $276,600

Credit ... FICA Payable.... $202,200

Credit... Unemployment Taxes Payable.... $74,400

3.

Debit... Salaries Payable (fringe benefit)... $36,000

Credit... Health Insurance Payable.... $36,000

NOTE : The third entry of health insurance payable can be combined with second entry.. I. E., health insurance can be paid out of payroll tax also.