Mexican Restaurant incurred salaries expense of $62,000 for 2018. The payroll expense includes employer FICA tax, in addition to state unemployment tax and federal unemployment tax. Of the total salaries, $22,000 is subject to unemployment tax. Also, the company provides the following benefits for employees: health insurance (cost to the company, $3,000), life insurance (cost to the company, $330), and retirement benefits (cost to the company, 10% of salaries expense) Requirements:
1. Journalize Ricardo's expenses for employee benefits and for payroll taxes.
Explanations are not required.
2. What was Ricardo's total expense for 2018 related to payroll?

1. The entry for the expenses of employee benefits and for payroll taxes would be as follows:

                                                Debit            Credit

Salaries Expense                   $62,000

FICA Taxes payable                                        $4,743

Health insurance payable                              $3,000

Life Insurance payable                                      $330

Retirement Benefits payable                         $6,200

Salaries payable                                             $47,727

                                                                     Debit            Credit

Payroll tax expense                                      $6,063            

FICA Taxes payable                                                           $4,743

State unemployment taxes payable                                 $1,188

Federal unemployment taxes payable                               $132

2. Ricardo's total expense for 2018 related to payroll was $68,063

Explanation:

1. According to the given the entry for the expenses of employee benefits and for payroll taxes would be as follows:

                                                  Debit            Credit

Salaries Expense                   $62,000

FICA Taxes payable                                        $4,743

Health insurance payable                              $3,000

Life Insurance payable                                      $330

Retirement Benefits payable                         $6,200

Salaries payable                                             $47,727

FICA Taxes payable=$62,000*7.65%=$4,743

Retirement Benefits payable=$62,000*10%=$6,200

                                                                     Debit            Credit

Payroll tax expense                                      $6,063            

FICA Taxes payable                                                           $4,743

State unemployment taxes payable                                 $1,188

Federal unemployment taxes payable                               $132

FICA Taxes payable=$62,000*7.65%=$4,743

State unemployment taxes payable=$22,000*5.4%=$1,188

Federal unemployment taxes payable=$22,000*0.6%=$132

2. In order to calculate Ricardo's total expense for 2018 related to payroll we would have to make the following calculation:

Total expenses related to payroll=Salaries expense+payroll tax expense

Total expenses related to payroll=$62,000+$6,063

Total expenses related to payroll=$68,063

Ricardo's total expense for 2018 related to payroll was $68,063

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