Exercise 3: Payroll Liabilities Employers are required to withhold the appropriate amount of taxes from their employees' paychecks (FICA, Federal and State Income taxes). Employers also must pay certain employer- only taxes such as Federal and State Unemployment taxes (FUTA and SUTA). RH Macy employs one employee, W. Hill, who earns $200 per day and is paid weekly for a five day work week on Fridays. Ms. Hill's required federal and state withholdings are $20 and $8 per week respectively. Assume all of Ms. Hill's wages are subject to Social Security and Medicare taxes. Prepare the journal entry needed to record Ms. Hill's payroll for the first week of November. (Friday falls on November 7th and please round all figures to two decimal places). Date Accounts Debit Credit Prepare RH Macy's journal entry to record the employer expense and liabilities related to payroll for the first payroll of November. RH Macy's SUTA cost equals $56 for the week and FUTA amounts to $12. Date Accounts Debit Credit Exercise 4: Contingent Liabilities Which of the following situations would require a journal entry for Street Fighter Company? 1.) Street Fighter (defendant) estimates that a pending lawsuit could result in damages of $1,000,000; it is reasonably possible that the plaintiff will win the case. 2.) Street Fighter faces a probable loss on a pending lawsuit; the amount is not reasonably estimable. 3.) Street Fighter estimates damages in a case at $2,500,000 with a high probability of losing the case. Once you have identified the situation, prepare the journal entry at the company's year-end. Date Accounts Debit Credit