4 3 points The November 2017 payroll of Walnut Company is 42

4. (3 points) The November 2017 payroll of Walnut Company is $4,200,000, of which $560,000 is exempt from Social Security tax because it represented amounts paid to certain employees in excess of $127,200. The amount paid to employees in excess of $7,000 was $3,950,000. Amounts withheld by Walnut were $906,000 for federal income taxes, $113,000 for state income taxes, $105,000 in charitable contributions, and $168,000 for 401-K employee contributions. Walnut’s effective state unemployment tax rate is 1.9% and the effective federal unemployment tax rate 0.6%. Prepare the journal entries Walnut should make to reflect its payroll expense and its payroll taxes expense.

Solution

Salaries and Wages Expense 4200000        Federal income taxes payable 906000        State income taxes payable 113000        Charitable contributions payable 105000        401-K employee contributions payable 168000        FICA taxes payable 286580 =(4200000-560000)*7.65%+(560000*1.45%)        Salaries and Wages payable 2621420 Payroll Tax Expense 174250          FICA Taxes Payable 168000          FUTA Taxes Payable 1500 =(4200000-3950000)*0.6%          SUTA Taxes Payable 4750 =(4200000-3950000)*1.9%