The payroll register of Wang Engineering Co. indicates $2,034 of social security withheld and $508.50 of Medicare tax withheld on total salaries of $33,900 for the period. Earnings of $10,200 are subject to state and federal unemployment compensation taxes at the federal rate of 0.6% and the state rate of 5.4%. On December 31, provide the journal entry to record the payroll tax expense for the period.

Wang Engineering Co.

Date: December 31

Debit: Salaries Expense $33,900

Credit: Cash $30,745.50

Credit: Social Security Payable $2,034

Credit: Medicare Tax Payable $508.50

Credit: FUTA Payable $612

To record payroll tax expense for the period.

Explanation:

Wang Engineering Co.

Salary = $33,900

Social Security = $2,034

Medicare Tax = $508.50

Federal Rate on earnings = $10,200 x 0.6% = $61.20

State Rate on Earnings = $10,200 x 5.4% = $550.80

FUTA = $61.20 + $550.80 = $612

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