Refer to Problem 10-3B. MLS Company’s tax year ends on December 31 and its federal Employer Identification Number is 548932154. It is located at 102 Grindstone Way, Columbus, Ohio 43085.
Required 

I. Prepare a Form 8109 for MLS Company’s April 15 deposit of its March FICA and employee income taxes.
2. Prepare MLS Company’s Form 941 for the first quarter.

Problem 10-3B:

MLS Company has five employees, each of whom earns \($1,600\) per month and is paid on the last day of each month. All five have been employed continuously at this amount since January 1. MLS uses a payroll bank account and special payroll checks to pay its employees. On June 1, the following accounts and balances exist in its general ledger:
a. FICA—Social Security Taxes Payable, \($992;\) FICA—Medicare Taxes Payable, \($232.\) (The balances of these accounts represent total liabilities for both the employer’s and employees’ FICA taxes for the May payroll only.)
b. Employees’ Federal Income Taxes Payable, \($1,050\) (liability for May only).
c. Federal Unemployment Taxes Payable, \($88\) (liability for April and May together).
d. State Unemployment Taxes Payable, \($440\) (liability for April and May together).

During June and July, the company had the following payroll transactions.

June.

15 Issued check payable to Security Bank, a federal depository bank authorized to accept employers’ payments of FICA taxes and employee income tax withholdings. The \($2,274\) check is in payment of the May FICA and employee income taxes.
30 Recorded the June payroll and transferred funds from the regular bank account to the payroll bank account. Issued checks payable to each employee in payment of the June payroll. The payroll register shows the following summary totals for the June pay period.

30 Recorded the employer’s payroll taxes resulting from the June payroll. The company has a merit rating that reduces its state unemployment tax rate to 4.0% of the first \($7,000\) paid each employee. The federal rate is 0.8%.

July.

15 Issued check payable to Security Bank in payment of the June FICA and employee income taxes.
15 Issued check to the State Tax Commission for the April, May, and June state unemployment taxes. Mailed the check and the second quarter tax return to the State Tax Commission.
31 Issued check payable to Security Bank in payment of the employer’s FUTA taxes for the second quarter of the year.
31 Mailed Form 941 to the IRS, reporting the FICA taxes and the employees’ federal income tax withholdings for the second quarter.
Required
Prepare journal entries to record the transactions and events for both June and July.

Transcribed Image Text:

Salaries and Wages Federal Office Shop Gross FICA Income Net Salaries Wages Pay Taxes Taxes Pay $3,800 $4,200 $8,000 $496 $1,050 $6,338 $116 *FICA taxes are Social Security and Medicare, respectively,