Recording Payroll Taxes

According to a summary of the payroll of PJW Co., $700,000 in earnings were subject to the 7.8% FICA tax. Also, $80,500 in earnings were subject to state and federal unemployment taxes.

Round your answers to the nearest cent.

a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 4.8%; federal unemployment, 1%. $fill in the blank 1

b. Illustrate the effects on the accounts and financial statements of recording the accrual of payroll taxes. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

Financial Statement Effects

		Balance Sheet
	Assets	=	Liabilities	+	Stockholders' Equity
Accounts receivableCashNo effect	+	CashMerchandise inventoryNo effect	=	Accounts payableFICA tax payableNo effect	+	Salaries payableSUTA payableNo effect	+	FUTA payableNotes PayableNo effect	+	Capital stockRetained earningsNo effect
	fill in the blank 8		fill in the blank 9		fill in the blank 10		fill in the blank 11		fill in the blank 12		fill in the blank 13
	Statement of Cash Flows		Income Statement
	FinancingInvestingOperatingNo effect	fill in the blank 15		Payroll tax expenseSales discountsSalesNo effect	fill in the blank 17