I'm not wanting anyone to do the work for me on this, but I'm just wanting to make sure I'm on the right track here.

I assume for the problem that I'm going to post below that for each of the different things like factory, office, and sales that I will debit an expense account and credit a payables account for each one. So that would be part 1.

And then I assume for part 2 that I would just take only those that are subject to the taxes and figure out the entries for the tax liabilities.

Can anyone tell me if I'm on the right track?


The data for this problem is as follows just so you can have an understanding of what I mean...........

On August 31, 2005, payroll data from the records of Earthtec Enterprises showed:

Payroll: Factory wages .................... $125,000
Office salaries .................. 82,500
Sales salaries ................... 98,000

Payroll deductions: Income tax withholding ........... $ 47,800
FICA tax (7.5%) .................. ?

Wages and salaries not subject to FICA tax:
Factory wages .................... $ 28,000
Office salaries .................. 40,000
Sales salaries ................... 45,000

Wages and salaries not subject to federal and state unemployment taxes:
Factory wages .................... $ 60,000
Office salaries .................. 80,000
Sales salaries ................... 72,000

Provide the entries necessary to:

(1) Record the payment of the payroll on August 31, 2005.
(2) Record the employer's payroll tax liabilities. (The federal unemployment tax rate is 0.8 percent; the state unemployment tax rate is 5.4 percent.)

I assume for the problem that I'm going to post below that for each of the different things like factory, office, and sales that I will debit an expense account and credit a payables account for each one. So that would be part 1.

For the debit, yes. You'll have 3 debits, one for each different expense account.

But I don't know what you mean by "credit a payable account for each one." Each one what? If you mean the way you did your other one, no.

Please see my response to your other payroll post. You're crediting payables for all the deductions, and then for the net amount left over that actually goes to the employees. I've never seen a salary payable credited for the entire gross amount. If your book is actually doing that, you need to include an example of what they are doing, including any follow-up entries.

You are also correct that you'll have to figure out what the amount is subject to each of the employer taxes. But you also need to do that for the FICA portion that is deducted from the employees checks. The amount of the deduction and the matching portion for the employer needs to be the same.