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The payroll register of Heritage Co. indicates $4,200 of social security withheld and $1,050 of Medicare tax withheld on total salaries of $70,000 for the period. Earnings of $12,000 are subject to state and federal unemployment compensation taxes at the federal rate of 0.8% and the state rate of 5.4%. Provide the journal entry to record the payroll tax expense for the period. If an amount box does not require an entry, leave it blank.

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Answer:

Dr. Payroll tax expense             $5,994

Cr. Social security Tax payable $4,200

Cr. Medicare Tax payable         $1050

Cr. State unemployment tax      $648

Cr. Federal unemployment tax  $96

Explanation:

Tax are recorded as expense in the period.

State unemployment tax is calculated by multiplying earning with the state tax rates

State unemployment tax = $12,000 x 5.4% = $648

Federal unemployment tax is calculated by multiplying earning with the federal tax rates

Federal unemployment tax = $12,000 x 0.8% = $96

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