Assume an employee of Rocco Rock Company earns $3,000 of gross wages during the current pay period and is required to remit to the government $300 for income tax and $150 for FICA. Consider the following two procedures for paying the employee: Procedure 1 (Withholdings) Procedure 2 (No Withholdings) Rocco Rock Company pays the Rocco Rock Company pays the employee employee net wages of $2,550 and will gross wages of $3,000 and the remit income taxes and FICA on behalf employee is responsible for remitting of the employee. income taxes and FICA himself. Required: 1-a. Ignoring employer payroll taxes, under each procedure calculate (a) the total labor cost for the company and (b) the amount of cash the employee will have after satisfying all responsibilities to the government. Total Labor Cost Amount of Cash Procedure 1 (Withholdings) Procedure 2 (No withholdings) 1-b. Do your answers for procedures 1 and 2 differ for (a)? for (b)? Yes No 2. Which approach does the government require? Procedure 1 (Withholdings) Procedure 2 (No withholdings) 3. Considering that employers are responsible for matching employees' FICA contributions, which procedure will employers prefer? Procedure 1 (Withholdings) Procedure 2 (No withholdings) Prepare the journal entries required by the employer under procedure 1, assuming that the employee is paid in cash, but the withholdings and matching employer FICA contribution have not yet been paid. (Assume no unemployment taxes.) (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the wages expense, including payroll deductions. Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Journal entry worksheet Record the payroll tax expense. Note: Enter debits before credits. Transaction General Journal Debit Credit 2