An electric device delivers a current of [tex]$15.0 A$[/tex] for 30 seconds. How many electrons flow through it?
Answer (1)
Calculate FICA Social Security taxes: S oc ia l S ec u r i t y T a x es = $26 , 000 × 0.062 = $1 , 612 .
Calculate FICA Medicare taxes: M e d i c a re T a x es = $26 , 000 × 0.0145 = $377 .
Calculate net salaries: N e t S a l a r i es = $26 , 000 − ( $1 , 612 + $377 + $2 , 500 ) = $21 , 511 .
Record the journal entry with debits to Salaries Expense ($26,000), FICA Social Security Taxes Expense ($1,612), and FICA Medicare Taxes Expense ($377), and credits to FICA Social Security Taxes Payable ($1,612 + $1,612 = $3,224), FICA Medicare Taxes Payable ($377 + $377 = $754), Federal Income Taxes Payable ($2,500), and Salaries Payable ($21,511).
Explanation
Understanding the Payroll Taxes Let's break down how to record the company's payroll taxes for January 14. We'll start by calculating the amounts for Social Security and Medicare taxes, then figure out the total withholdings and net salaries. Finally, we'll prepare the journal entry.
Calculating Social Security Taxes First, we need to calculate the FICA Social Security taxes withheld from the employees' salaries. The calculation is as follows: S oc ia l S ec u r i t y T a x es = S a l a r i es × S oc ia l S ec u r i t y T a x R a t e S oc ia l S ec u r i t y T a x es = $26 , 000 × 0.062 = $1 , 612 So, the FICA Social Security taxes withheld are $1,612.
Calculating Medicare Taxes Next, we calculate the FICA Medicare taxes withheld from the employees' salaries. The calculation is: M e d i c a re T a x es = S a l a r i es × M e d i c a re T a x R a t e M e d i c a re T a x es = $26 , 000 × 0.0145 = $377 Thus, the FICA Medicare taxes withheld are $377.
Calculating Total Withholdings Now, let's determine the total amount of employee withholdings. This includes FICA Social Security taxes, FICA Medicare taxes, and federal income taxes: T o t a l Wi t hh o l d in g s = S oc ia l S ec u r i t y T a x es + M e d i c a re T a x es + F e d er a l I n co m e T a x es T o t a l Wi t hh o l d in g s = $1 , 612 + $377 + $2 , 500 = $4 , 489 The total employee withholdings amount to $4,489.
Calculating Net Salaries We'll now calculate the net salaries paid to employees by subtracting the total withholdings from the total salaries earned: N e t S a l a r i es = S a l a r i es E a r n e d − T o t a l E m pl oyee Wi t hh o l d in g s N e t S a l a r i es = $26 , 000 − $4 , 489 = $21 , 511 The net salaries paid to employees are $21,511.
Calculating Employer's FICA Tax Expenses Now, we need to calculate the employer's FICA Social Security and Medicare tax expenses. The employer matches the employee's FICA tax contributions. Employer's FICA Social Security Tax Expense: E m pl oye r ′ s S oc ia l S ec u r i t y T a x = S a l a r i es × S oc ia l S ec u r i t y T a x R a t e E m pl oye r ′ s S oc ia l S ec u r i t y T a x = $26 , 000 × 0.062 = $1 , 612 Employer's FICA Medicare Tax Expense: E m pl oye r ′ s M e d i c a re T a x = S a l a r i es × M e d i c a re T a x R a t e E m pl oye r ′ s M e d i c a re T a x = $26 , 000 × 0.0145 = $377
Recording the Journal Entry Finally, let's record the journal entry. We'll debit Salaries Expense for the total salaries earned, and credit the various liabilities (FICA Social Security Taxes Payable, FICA Medicare Taxes Payable, Federal Income Taxes Payable, and Salaries Payable). We will also record the employer's portion of FICA taxes.
Journal Entry:
Account
Debit
Credit
Salaries Expense
$26,000
FICA Social Security Taxes Payable
$1,612
FICA Medicare Taxes Payable
$377
Federal Income Taxes Payable
$2,500
Salaries Payable
$21,511
FICA Social Security Taxes Expense
$1,612
FICA Medicare Taxes Expense
$377
FICA Social Security Taxes Payable
$1,612
FICA Medicare Taxes Payable
$377
Final Answer In summary, the journal entry records the salaries expense, employee withholdings, net salaries paid, and the employer's FICA tax expenses. The debit side reflects the expenses, while the credit side reflects the liabilities.
Examples
Understanding and recording payroll taxes is crucial for businesses to accurately report their financial obligations. For example, a small business owner needs to track salaries, withholdings, and employer contributions to ensure compliance with tax laws. Correctly calculating and recording these amounts helps in preparing accurate financial statements and avoiding penalties from tax authorities. This process ensures that employees are paid correctly and that the business meets its legal and ethical responsibilities.
