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QS 11-5 Recording employee payroll taxes LO P2 On January 15, the end of the first pay period of the year, North Company’s employees earned $50,000 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%, $2,600 of federal income taxes, $1,330 of medical insurance deductions, and $120 of union dues. No employee earned more than $7,000 in this first period. Prepare the journal entry to record North Company’s January 15 salaries expense and related liabilities.

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Answer: Please see explanation column for answer

Explanation:

Journal entry to record North Company’s January 15 salaries expense and related liabilities

Date      Account Explanation            Debit                  Credit

Jan 15            Salaries expense          $50,000

FICA Social Security taxes                                              $3,100

FICA Medicare taxes                                                        $725

federal income taxes                                                        $2,600

medical insurance deductions                                         $1,330

Union dues                                                                        $120

Salaries payable                                                                $42,125

Calculations

Given, $2,600 of federal income taxes,

$1,330 of medical insurance deductions,

$120 of union dues.

We will then calculate

FICA Social Security taxes at the rate of 6.2%

6.2% X 50,000= $3,100

FICA Medicare taxes at the rate

1.45 %X  50,000= $725

Salaries payable =  Salaries expense -  FICA Social Security taxes-FICA Medicare taxes -federal income taxes-medical insurance deductions, -union dues

$(50,000 - 3,100- 725-2600-1330-120)  = $42,125

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