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Marty’s German Restaurants incurred salary expense of $70,000 for 2012. The payroll expense includes employer FICA tax of 7.65%, in addition to state unemployment tax of 5.4% and federal unemployment tax of .8%. Of the total salaries, $15,000 is subject to unemployment tax. Also, the company provides the following benefits for employees health insurance (cost to the company $3050), life insurance (cost to the company, $400), and retirement benefits (cost to the company, 5% of salary expense.)
Directions:
Journalize Marty’s expenses for employee benefits and for payroll taxes.
Explanations are not required.
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PROBLEM #6
(20 Points)
JarJar Company had the following series of transactions:
11/01/11 JarJar Company borrowed $18,000 by issuing a 12%, 1 year note.
12/1/11 JarJar Company borrowed $25,000 by issuing a 8%, 6 month note.
5/1/12 JarJar paid the full payment due of Note 2.
11/01/12 JarJar paid the full payment due of Note 1
Directions:
1) Record all necessary journal entries for JarJar Company for 2011
2) Record all necessary journal entries for JarJar Company for 2012
Explanations are not required.
PROBLEM #7
(10 Points)
At the end of February, the payroll registry for Death Star Corporation showed $270,000 in total salaries for the month and federal income taxes withheld as $63,350. Other taxes are as follows:
FICA-Social Security 6.2%
FICA-Medicare 1.45%
FUTA .8% of first $7,000 per employee
SUTA 4% of first $7,000 per employee
Only $30,000 of salaries were subject to unemployment taxes. All salaries are subject to FICA taxes.
Directions:
1) Prepare the journal entry to record the January salaries expense and withholdings.
2) Prepare the journal entry to record the employer’s payroll taxes for January.
Please include explanations.
