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Payroll Account Analysis; Journalizing payroll transactions

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Cal Ruther, an employer, is subject to FICA taxes, but exempt from FUTA and SUTA taxes. During the last quarter of the year, his employees earned monthly wages of $8,500, all of which is taxable. The amount of federal income taxes each month is $1,040. Journalize the payments of wages, and record the payroll tax on November 30.

Prior to posting the November 30 payroll transactions, FICA Taxes Payable-OASDI, FICA Taxes Payable-HI, and Employees FIT Payable had zero balances. Ruther must pay the FICA taxes and income taxes withheld on the November 30 payroll. Journalize the electronic transfer of the payroll taxes on December 15.

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Solution Summary

The solution details all the journal entries in good form together with a proof for better understanding.

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Entry to record payroll on November 30

Debit wages 8500.00
Credit FICA taxes payable 650.25
Credit Federal income tax payable 1040.00
Credit Cash ...

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