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2 December, 10:16

Urban Window Company had gross wages of $320,000 during the week ended July 15. The number of wages subject to social security tax was $320,000, while the number of wages subject to federal and state unemployment taxes was $40,000. Tax rates are as follows:

Social security Medicare State unemployment Federal unemployment 6.0% 1.5% 5.4% 0.6% The total amount withheld from employee wages for federal taxes was $75,200. For a compound transaction, if an amount box does not require an entry, leave it blank. a. Journalize the entry to record the payroll for the week of July 15 b. Journalize the entry to record the payroll tax expense incurred for the week of July 15.

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  1. 2 December, 11:20
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    wages expense 320,000 debit

    cash 218,400 credit

    FICA tax payable 2,160 credit

    SUTA tax payable 240 credit

    Social security payable 24,000 credit

    wages income tax payable 75,200 credit

    --to record July 15th payment to employees wages--

    payroll tax expenses 26,400 debit

    FICA tax payable 2,160 credit

    SUTA tax payable 240 credit

    Social security payable 24,000 credit

    ---to record the payroll tax for the week ended July 15th--

    Explanation:

    We multiply the wages subjet to taxation by each rate:

    social security:

    320,000 x 7.5% = 24,000

    SUTA

    40,000 x 5.4% = 2,160

    FICA

    40,000 x 0.6% = 240

    For this three concepts, the employee will have liability for the same amount for payroll taxes

    Income tax 75,200

    net wages: 320,000 - 24,000 - 2,160 - 240 - 75,200 = 218,400
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