Question

In March, gross earnings of Perlman Company totaled $250,000. All earnings are subject to 7.65% FICA taxes, 5.4% state unemployment taxes, and 0.8% federal unemployment taxes.

A) Compute the employer's payroll tax expense.
B) Prepare the entry to record payroll taxes.

Answer 1

A. Employer payroll tax expense includes FICA and State and Federal Unemployment tax.

= (250,000 * 7.65%) + (250,000 * 5.4%) + (250,000 * 0.8%)

= 19,125 + 13,500 + 2,000

= $‭34,625

B.

Date Details Debit Credit

March Payroll Tax expense $34,625

FICA Taxes $19,125

State Unemployment Taxes $13,500

Federal Unemployment Taxes $2,000‬