Hoyico Company has five employees, each of whom earn $1,600 per month and are paid on the last day of each month. All five have been employed continuously at this amount since January 1. On June 1, the following accounts and ballances exist in the General Ledger:
FICA-Social Security taxes payable; $992 (both Employee and Employer match)
FICA-Medicare taxes payable $232 (both Employee and Employer match)
Employee Federal Income tax payable; $1,050 (liability for May only)
Federal Unemployment taxes payable; $66 (liability for April and May)
State Unemployment taxes payable; $440 (liability for April and May)
*During June and July the company had the following payroll transactions:
June 25: Issued check payable to America Bank, a federal depository bank authorized to accept employer’s payments of FICA taxes and employee income tax withholdings. The $2,274 check is in payment of the May FICA and employee income taxes (think about the required journal entry, with all the extra info provided).
June 30: Recorded the Journal entry for the June salaries payable. Record the cash payment of the June payroll (the company issued checks payable to each employee in payment of the June payroll.
The payroll register shows the following summary totals for the June pay period:
SALARIES:
Office Salaries: $3,800
Shop Salaries: $4,200
Gross Pay $8,000
FICA taxes: $496 Social security
$116 Medicare
Federal Income taxes: $1,050
Net Pay: $6,338
June 30: Recorded the employer’s payroll taxes resulting from the June payroll. The company has a merit rating that reduces its state unemployment tax rate to 4.0% of the first $7,000 paid to each employee. The Federal rate is 0.6%.
July 15: Issued check payable to America Bank in payment of the June FICA and employee incoem taxes.
July 15: Issued check payable to State Tax Commision for the April, May and June state unemployment taxes. Mailed the check and the second-quarter tax return to the State Commisions.
July 31: Issued check payable to America Bank in payment of the employer’s FUTA taxes for the first quarter of the year.
Mailed Form 941 to the IRS, reporting the FICA taxes and the employee’s income taxes and employees’ federal income tax withholdings for the second quarter. (NOT SURE if journal entry is needed to record this Forms, and/or required to transfer any funds with this report?).
REQUIRED: Prepare journal entries to record the transactions and events for both June and July.
Please make sure to post your calculations and comments on how to get there since it’s really important for me to understand this concepts. I really appreciate your help.
