5) Total payroll was $444,000, of which $120,000is exempt from Social Security tax because it represented amounts paid in excess of $128,400to certain employees. The amount paid to employees in excess of $7,000(the maximum for both federal and state unemployment tax) was $401,000. Income taxes in the amount of $77,900were withheld, as was $8,700in union dues. The state unemployment tax is 3.5%, but Indigo Company is allowed a credit of 2.3% by the state for its unemployment experience. Also, assume that the current FICA tax is 7.65% on an employee's wages to $128,400and 1.45% in excess of $128,400. No employee for Indigo makes more than $135,000. The federal unemployment tax rate is 0.8% after state credit.

Prepare the necessary journal entries if the wages and salaries paid and the employer payroll taxes are recorded separately.

Account Titles and Explanation

(To record employer payroll taxes)