On January 15, the end of the first pay period of the year, North Company’s employees earned $40,000 of sales salaries. Withholdings from the employees’ salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $3,100 of federal income taxes, $593 of medical insurance deductions, and $230 of union dues. No employee earned more than $7,000 in this first period. Prepare the journal entry to record North Company’s January 15 salaries expense and related liabilities.

Dr Salaries expense40,000

Cr FICA - Social security taxes payable2,480

Cr FICA - medicare taxes payable 580

Cr Employee medical insurance deduction 593

Cr Union dues 230

Cr Salaries payable 33,017

Cr Federal income taxes payable3,100

Explanation:

Preparation of the journal entry to record North Company’s January 15 salaries expense and related liabilities

Jan 15

Dr Salaries expense40,000

Cr FICA - Social security taxes payable2,480(6.2%*40,000)

Cr FICA - medicare taxes payable 580

(1.45%*40,000)

Cr Employee medical insurance deduction 593

Cr Union dues 230

Cr Salaries payable 33,017

Cr Federal income taxes payable3,100

Salaries payable is calculated as:

Salaries expense40,000

Less: FICA - Social security taxes payable(2,480)

FICA - medicare taxes payable (580)

Employee medical insurance deduction (593)

Union dues (230)

Federal income taxes payable (3,100)

=$33,017

answer; monopolistic competition;