(Payroll Tax Entries) The payroll of Grich Company for September 2014 is

as follows.

Total payroll was $960,000, of which $220,000 is exempt from Social Security tax

because it represented amounts paid in excess of $102,000 to certain employees. The

amount paid to employees in excess of $7,000 was $800,000. Income taxes in the

amount of $180,000 were withheld, as was $18,000 in union dues.

The state unemployment tax is 3.5%, but Grich Company is allowed a credit of 2.3%

by the state for its unemployment experience. Also, assume that the current F.I.C.A.

tax is 7.65% on an employeeAc€?cs wages to $102,000 and 1.45% in excess of $102,000.

No employee for Grich makes more than $250,000. The federal unemployment tax

rate is 0.8% after state credit.

Instructions

Prepare the necessary journal entries if the wages and salaries paid and the employer

payroll taxes are recorded separately.

FUTA (unemployment) tax rate: The tax applies to the first $7,000 you paid to each employee as wages during the year. You

may receive a credit for paying state unemployment tax. If the rate is 6% and you are entitled to the maximum 5.4% credit, the

FUTA tax rate after credit is 0.6% on federal level. (from IRS)