Great Lakes Tutoring had the following payroll information on February 28: $$\begin{array} { | c | c | c | }
\hline \text { Employee } & \text { Gross Pay } & \begin{array} { c }
\text { Cumulative Earnings } \
\text { Prior to this Payroll }
\end{array} \
\hline \text { R Hill } & \$ 4,000 & \$ 4,000 \
\hline
\end{array}$$ Assume:
FICA tax rates are: OASDI 6.2% on a limit of $106,800 and Medicare 1.45%
State Unemployment tax rate is 2% on the first $7,000
Federal Unemployment tax rate is 0.8% on the first $7,000
Using the information above,the journal entry to record the payroll tax expense for Great Lakes Tutoring would include:

Question

Great Lakes Tutoring had the following payroll information on February 28: $$\begin{array} { | c | c | c | } 
\hline \text { Employee } & \text { Gross Pay } & \begin{array} { c } 
\text { Cumulative Earnings } \
\text { Prior to this Payroll }
\end{array} \
\hline \text { R Hill } & \$ 4,000 & \$ 4,000 \
\hline
\end{array}$$ Assume:
FICA tax rates are: OASDI 6.2% on a limit of $106,800 and Medicare 1.45%
State Unemployment tax rate is 2% on the first $7,000
Federal Unemployment tax rate is 0.8% on the first $7,000
Using the information above,the journal entry to record the payroll tax expense for Great Lakes Tutoring would include:

Quizplus · Accepted Answer

To record the payroll tax expense for Great Lakes Tutoring, we need to calculate the various taxes based on the gross pay of $4,000 for R Hill.

- OASDI tax: 6.2% of $4,000 = $248 (since the limit of $106,800 has not been exceeded)
- Medicare tax: 1.45% of $4,000 = $58
- State Unemployment tax: 2% of $4,000 (since the gross pay is less than or equal to $7,000) = $80
- Federal Unemployment tax: 0.8% of $4,000 (since the gross pay is less than or equal to $7,000) = $32

Therefore, the total payroll tax expense is $418 ($248 + $58 + $80 + $32).

The journal entry to record the payroll tax expense for Great Lakes Tutoring would be:

Debit Payroll Tax Expense: $418
Credit OASDI Payable: $248
Credit Medicare Payable: $58
Credit SUTA Payable: $80
Credit FUTA Payable: $32

Option D includes all of the correct accounts and amounts, so it is the best choice.

Great Lakes Tutoring Had the Following Payroll Information on February