On January 8

							On January 8, the end of the first weekly pay period of the year, Royal Company's payroll register
showed that its employees earned $26,760 of office salaries and $60,840 of sales salaries. Withholdings
from the employees' salaries include FICA Social Security taxes at the rate of 6.20%, FICA Medicare taxes
at the rate of 1.45%, $13,160 of federal income taxes, $1,420 of medical insurance deductions, and $960
of union dues. No employee earned more than $7,000 in this first period.



Required:

1.1

Calculate FICA Social Security taxes payable and FICA Medicare taxes payable by the employees of Royal
Company. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)




 FICA—Social sec. taxes payable              $

 FICA—Medicare taxes payable $



1.2

Prepare the journal entry to record Royal Company's January 8 (employee) payroll expenses and
liabilities. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)



Date     General Journal Debit      Credit

Jan. 8    Office salaries expense

          Sales salaries expense

             FICA-Social sec. taxes payable

             FICA-Medicare taxes payable

             Employee fed. inc. taxes payable

             Employee medical insurance payable

             Employee union dues payable

             Salaries payable
2.

Prepare the journal entry to record Royal's (employer) payroll taxes resulting from the January 8 payroll.
Royal's merit rating reduces its state unemployment tax rate to 6% of the first $7,000 paid each
employee. The federal unemployment tax rate is 0.8%. (Round your answers to 2 decimal places. Omit
the "$" sign in your response.)



Date     General Journal Debit     Credit

Jan. 8    Payroll taxes expense

               FICA-Social sec. taxes payable

               FICA-Medicare taxes payable

               State unemployment taxes payable

               Federal unemployment taxes payable




Explanation:

1.2

To record payroll for period.

FICA—Social sec. taxes payable = $87,600 × 6.2% = $5,431.20

FICA—Medicare taxes payable = $87,600 × 1.45% = $1,270.20



2

To record employer payroll taxes.

State unemployment taxes payable = $87,600 × 0.06 = $5,256.00

Federal unemployment taxes payable = $87,600 × 0.008 = $700.80