P13-3 (Payroll Tax Entries) Star Wars Company pays its office employee payroll weekly. Below is a partial list of employees and their payroll data for August. Because August is their vacation period, vacation pay is also listed.
Employee Earnings to July 31 Weekly Pay Vacation Pay to be Received in Aug
Mark Hamell $4,200 $180 -----------
Carrie Fisher $3,500 150 $300
Harrison Ford $2,700 110 $220
Alec Guinness $7,400 250 -----------
Peter Cushing $8,000 290 $580
Assume that the federal income tax withheld is 10% of wages. Union dues withheld are 2% of wages. Vacations are taken the second and third weeks of August by Fisher, Ford, and Cushing. The state unemployment tax rate is 2.5% and the federal is 0.8%, both on a $7,000 maximum. The F.I.C.A. rate is 7.65% on employee and employer on a maximum of $97,500 per employee. In addition, a 1.45% rate is charged both employer and employee for an employee’s wage in excess of $97,500.
Instructions
Make the journal entries necessary for each of the four August payrolls. The entries for the payroll and for the company’s liability are made separately. Also make the entry to record the monthly payment of accrued payroll liabilities.
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