During the month of March, Prouncer Company's employees earned wages of $70,000. Withholdings related to these wages were $5,355 for Social Security, $7,500 for federal income tax, $3,100 for state income tax, and $400 for union dues. The company incurred no cost related to these earnings for federal unemployment tax, but incurred $700 for state unemployment tax.
a) Prepare the necessary March 31 journal entry to record wages expense and wages payable. Assume that wages earned during March will be paid during April.
b) Prepare the entry to record the company's payroll tax expense.
See attached Excel
Payroll expense 70,000
Payroll taxes payable - FICA 5,355
Payroll taxes payable - FIT 7,500
Payroll taxes payable - State W/H 3,100
Union dues payable 400
Payroll payable 53,645
To record the payroll accrued as of the end of March.
Payroll tax expense - ...
The solution presents the accounting entries necessary to record the payroll and related liabilities for Prouncer Company for March. Following the entries are full explanations for the 'why's of the entries.