College Accounting 2nd Edition by David Haddock, John Price,Michael Farina

Exercise 1

Computing employer's social security tax, Medicare tax, and unemployment taxes.
A payroll summary for Styles for Less, owned by Nikki Parikh, for the quarter ending September 30, 2013, appears below. The business prepared the tax deposit forms and issued checks as follows during the quarter:
a. Federal Tax Deposit Coupon, Form 8109, check for July taxes, paid on August 15.
b. Federal Tax Deposit Coupon, Form 8109, check for August taxes, paid on September 15.

INSTRUCTIONS
1. Prepare the general journal entry on July 7, 2013, to record the employer's payroll tax expense on the payroll ending that date. Use journal page 31. All earnings are subject to the following taxes:

2. Make the entries in general journal form to record deposit of the employee income tax withheld and the social security and Medicare taxes (both employees' withholding and employer's matching portion) on August 15 for July taxes and on September 15 for the August taxes.
Analyze: How much would a SUTA rate of 1.5 percent reduce the tax for the payroll of July 7?