Payroll and Payroll Taxes Bailey Dry Cleaners has 6 employees who were paid the following wages during 2013:

 

The state allows the company a 1% unemployment compensation merit-rating reduction from the normal rate of 5.4%. The federal unemployment rate is 0.6%. The maximum unemployment wages per employee are $7,000 for both the state and the federal government. Income tax withholdings of 20% are applied to all employees. A F.I.C.A. tax rate of 6% on the employee and 8% on the employer is applied to the first $100,000 of each employee’s wages.         

Required:

1. Calculate the amount of payroll taxes to be paid by Bailey.

2. Prepare the journal entries to record the payment of payroll and the payroll tax expense.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

  

Frank Johnson Bill Long Duff Morse Laura Stewart Cindy Sharpe Melissa Ledbetter Total $ 27,000 18,000 105,000 28,000 26,000 20,000 $224,000