Jackson Autos has one employee. As of March 30, their employee had already earned $6,300. For the pay period ending April 15, their employee earned an additional $2,000 of gross wages. Only the first $7,000 of annual earnings are subject to FUTA of 0.6% and SUTA of 5.4%. The journal entry to record the employer's unemployment payroll taxes for the period ending April 15, would be:

Question

Quizplus · Accepted Answer

The FUTA tax on the first $7,000 of annual earnings is 0.6%, which calculates to $42.00 ($7,000 x 0.006). The SUTA tax on the first $7,000 of annual earnings is 5.4%, which calculates to $378.00 ($7,000 x 0.054). Therefore, the total unemployment payroll taxes for the period ending April 15 would be $420. The journal entry to record this would be:

Payroll Taxes Expense 79.80 [$2,000 x ($10.20 / $2,000)]
Federal Unemployment Tax Payable 42.00 [$2,000 x 0.006]
State Unemployment Tax Payable 37.80 [$2,000 x 0.054]
(Or rounded to the nearest penny for each account)

Jackson Autos Has One Employee