A company has three employees, each of whom earns ($ 2,000) per month and is paid on
Question:
A company has three employees, each of whom earns \(\$ 2,000\) per month and is paid on the last day of each month. On March 1, the following accounts and balances appeared in its ledger:
a. FICA Taxes Payable, \(\$ 900\). (The balance of this account represents the liability for both the employer and employees' FICA taxes for the February 28 payroll only.)
b. Employees' Federal Income Taxes Payable, \(\$ 1,020\) (liability for February only).
c. Federal Unemployment Taxes Payable, \(\$ 96\) (liability for first two months of the year).
d. State Unemployment Taxes Payable, \(\$ 360\) (liability for January and February).
e. Employees' Medical Insurance Payable, \(\$ 1,080\) (liability for January and February).
During March and April, the company completed the following transactions related to payroll:
Mar. 11 Issued check payable to East Branch Bank, a federal depository bank authorized to accept employers' payments of FICA taxes and employee income tax withholdings. The \(\$ 1,920\) check was in payment of the February FICA and employee income taxes.
31 Prepare a general journal entry to record the March Payroll Record which had the following column totals:
31 Recorded the employer's \(\$ 270\) liability for its \(50 \%\) contribution to the medical insurance plan of employees.
31 Issued checks payable to each employee in payment of the March payroll. (Record these with a single general journal entry.)
31 Prepared a general journal entry to record the employer's payroll taxes resulting from the March payroll. The company has a merit rating that reduces its state unemployment tax rate to \(3.0 \%\) of the first \(\$ 7,000\) paid each employee. The federal rate is \(0.8 \%\).
Apr. 15 Issued check payable to East Branch Bank in payment of the March FICA and employee income taxes.
15 Issued check payable to American Insurance Company in payment of the employee medical insurance premiums for the first quarter.
Apr. 15 Issued check to the State Tax Commission for the January, February, and March state unemployment taxes. Mailed the check along with the first quarter tax return to the State Tax Commission.
30 Issued check payable to East Branch Bank. The check was in payment of the employer's federal unemployment taxes for the first quarter of the year.
30 Mailed Form 941, reporting the FICA taxes and the employees' federal income tax withholdings for the second quarter.
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Prepare the necessary general journal entries to record the transactions.
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