On January 8, the end of the first weekly pay period of the year, Royal Company’s payroll register showed that…

On January 8, the end of the first weekly pay period of the year, Royal Company’s payroll register showed that its employees earned $11,380 of office salaries and $32,920 of sales salaries. Withholdings from the employees’ salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $6,340 of federal income taxes, $670 of medical insurance deductions, and $420 of union dues. No employee earned more than $7,000 in this first period.

Required
1.
Calculate FICA Social Security taxes payable and FICA Medicare taxes payable. Prepare the journal entry to record Royal Company’s January 8 (employee) payroll expenses and liabilities.

2.
Prepare the journal entry to record Royal’s (employer) payroll taxes resulting from the January 8 payroll. Royal’s merit rating reduces its state unemployment tax rate to 4% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.8%.