Main Street Restaurant incurred salaries expense of $60,000 for 2016
The payroll expense includes employer FICA tax, in addition to state unemployment tax and federal unemployment tax. Of the total salaries, $17,000 is subject to unemployment tax. Also, the company provides the following benefits for employees: health insurance (cost to the company, $2,500 ), life insurance (cost to the company, $700 ), and retirement benefits (cost to the company, 10% of salaries expense). Journalize Main Street's expenses for employee benefits and for payroll taxes. Explanations are not required.
What will be an ideal response
Accounts and Explanation Debit Credit
Payroll Tax Expense 5,644
FICA—OASDI Taxes Payable (6.2% x $60,000 ) 3,720
FICA—Medicare Taxes Payable (1.45% x $60,000 ) 870
Federal Unemployment Taxes Payable (0.6% x $17,000 ) 102
State Unemployment Taxes Payable (5.6% x $17,000 ) 952
Employee Benefits Expense 9,200
Employee Health Insurance Payable 2,500
Employee Life Insurance Payable 700
Employee Retirement Benefits Payable 6,000
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