The summary of the payroll for the monthly pay period ending July 15 indicated the following: Salaries $180,000
Federal income tax withheld 32,300
Medical insurance withheld 7,370
Social security tax withheld 10,800
Medicare tax withheld 2,700
Illustrate the effects on the accounts and the financial statements of
(a) the payroll
(b) the employer's payroll tax expense for the month.
The state unemployment tax rate is 4.2%, and the federal unemployment tax rate is 0.8%. Only $30,000 of salaries are subject to unemployment taxes

Solution :

Assets = Liabilities + Stockholders' equity

Cash    Employee Federal     Employee Medical   Employee FICA Retained    

            Income tax payable   Insurance payable   Tax payable      earnings        

-126830           32300                        7370                    13500             -180000

Statement of Cash Flows                                         Income Statement

July 15   Operating Activities   126830    Outflow  July-15 Wages & salaries

                                                                                               Expenses -180000

Assets = Liabilities + Stockholders' equity        

Cash  Employee FICA Tax    FUTA tax payable   SUTA tax    Retained

           Payable                                                          payable      earnings

0          13500                                  240                       1260          -15000

Statement of Cash Flows                                         Income Statement

July-15      No effect                                            Jul-15  Payroll tax expense

                                                                                 15000

answergoing to the symphony;

answerthe above statement is false;