E13-6 (L01) (Payroll Tax Entries) The payroll of YellowCard Company for September 2016 is as follows. Total payroll was $480,000, of which $110,000 is exempt from Social Security tax because it represented amounts paid in excess of $118,500 to certain employees. The amount paid to employees in excess of $7,000 was $400,000. Income taxes in the amount of $80,000 were withheld, as was $9,000 in union dues. The state unemployment tax is 3.5%, but YellowCard 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 employees wages to $118,500 and 1.45% in excess of $118,500. No employee for YellowCard makes more than $125,000. The

federal unemployment tax rate is 0.8% after state credit.

Instructions

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

Calculate the amounts for a liability for 2016 and 2017 for compensated absences.

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