The payroll clerk at Batts, Inc., has used a spreadsheet program to produce a printout of the salaries for February 15.

Employees' total earnings		$40,000
Deductions from earnings:
Federal income tax	$6,400
State income tax	1,600
Social Security tax	2,480
Medicare tax	580
Medical insurance	800
Total deductions		11,860
Take-home pay		$28,140

Use the data in the spreadsheet to:
1.	Prepare the entry to record the weekly salary. The salaries will not be paid until February 20.
2.	Prepare the entry to record the employer's payroll tax expense. In addition to the data for Social Security and Medicare in the table, which the employer must also pay, assume a 0.8% federal unemployment tax rate and a 5.4% state unemployment tax rate. Also assume that all wages are subject to these two taxes.

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1

Correct 2 of Item 2

February 15

Income Tax Expense

Income Tax Payable

Medical Insurance Premium Payable

Prepaid Insurance

Salaries Expense

Salaries Payable

Correct 3 of Item 2

,

Correct 6 of Item 2

,

Correct 7 of Item 2

1

2

Correct 8 of Item 2

Accounts Payable

Federal Income Tax Expense

Federal Income Tax Payable

Federal Unemployment Tax Payable

Correct 9 of Item 2

,

Correct 12 of Item 2

,

Correct 13 of Item 2

2

3

Correct 14 of Item 2

Payroll Tax Expense

State Income Tax Expense

State Income Tax Payable

State Unemployment Tax Payable

Correct 15 of Item 2

,

Correct 18 of Item 2

,

Correct 19 of Item 2

3

4

Correct 20 of Item 2

Notes Payable

Social Security Tax Expense

Social Security Tax Payable

Social Security Tax Receivable

Correct 21 of Item 2

,

Correct 24 of Item 2

,

Correct 25 of Item 2

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5

Correct 26 of Item 2

Cash

Medicare Tax Expense

Medicare Tax Payable

Salaries Payable

Correct 27 of Item 2

,

Correct 30 of Item 2

,

Correct 31 of Item 2

5

6

Correct 32 of Item 2

Medical Insurance Premium Expense

Medical Insurance Premium Payable

Payroll Tax Expense

Wages Receivable

Correct 33 of Item 2

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Correct 36 of Item 2

,

Correct 37 of Item 2

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7

Correct 38 of Item 2

Federal Unemployment Tax Payable

Income Summary

Salaries Expense

Salaries Payable

Correct 39 of Item 2

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Correct 42 of Item 2

,

Correct 43 of Item 2

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8

Correct 44 of Item 2

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9

Correct 50 of Item 2

2. Feb 15

Cash

Salaries Expense

Payroll Tax Expense

Salaries Payable

Correct 51 of Item 2

,

Correct 54 of Item 2

,

Correct 55 of Item 2

9

10

Correct 56 of Item 2

Accounts Payable

Cash

Social Security Tax Expense

Social Security Tax Payable

Correct 57 of Item 2

,

Correct 60 of Item 2

,

Correct 61 of Item 2

10

11

Correct 62 of Item 2

Federal Income Tax Payable

Medicare Tax Expense

Medicare Tax Payable

Notes Payable

Correct 63 of Item 2

,

Correct 66 of Item 2

,

Correct 67 of Item 2

11

12

Correct 68 of Item 2

Federal Income Tax Payable

Federal Unemployment Tax Expense

Federal Unemployment Tax Payable

Salaries Payable

Correct 69 of Item 2

,

Correct 72 of Item 2

,

Correct 73 of Item 2

12

13

Correct 74 of Item 2

Cash

Medical Insurance Premium Payable

State Unemployment Tax Expense

State Unemployment Tax Payable

Correct 75 of Item 2

,

Correct 78 of Item 2

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Correct 79 of Item 2

13

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