Payroll Accounting and Discussion of Labor Costs

Blitzen Marketing Research paid its weekly and monthly payroll on January 31. The following information is available about the payroll:

Item	Amount
Monthly salaries	$237,480
Hourly wages	585,000
FICA:
Social Security (both employee and employer)	6.20%
Medicare (both employee and employer)	1.45%
Withholding for federal income taxes	$108,500
Federal unemployment taxes	1,200
State unemployment taxes	4,000

Blitzen will pay both the employer's taxes and the taxes withheld on April 15.

Required:

1. Prepare the journal entries to record the payroll payment and the incurrence of the associated expenses and liabilities. If an amount box does not require an entry, leave it blank. If required, round your answers to the nearest penny.

Jan. 31	Salaries Expense
	Wages Expense
	Social Security Taxes Payable (Employer)
	Medicare Taxes Payable (Employer)
	Salaries Expense
	Wage Payable
	(Record salaries, wages, and liabilities)
Jan. 31	Salaries Expense
	Social Security Taxes Expense (Employee)
	Medicare Taxes Payable (Employer)
	State Unemployment Taxes Expense
	Social Security Taxes Payable (Employer)
	Social Security Taxes Payable (Employee)
	Wages Payable
	Salaries Payable
	(Record employer payroll taxes)

2. What is the employees' gross pay? $

What amount does Blitzen pay in excess of gross pay as a result of taxes? (Note: Provide both an absolute dollar amount and as a percentage of gross pay, rounding to two decimal places.) $

This is % of gross pay.

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2. Gross pay is the amount of wages and salaries prior to withholdings. In addition to withholdings, the employer pays some payroll taxes.

3. How much is the employees' net pay as a percentage of total payroll related expenses? (Note: Round answer to two decimal places.) %

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3. This is an employee's take-home pay as a percentage of wages or salaries earned prior to withholdings.

4. Conceptual Connection: If another employee can be hired for $60,000 per year, what would be the total cost of this employee to Blitzen? Do not round intermediate calculations and round your final answer to two decimal places. $

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4. Determine total costs associated with the employee.