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On January 15, the end of the first biweekly pay period of the year, North Company’s payroll register showed that its employees earned $35,000 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%, $6,500 of federal income taxes, $772.50 of medical insurance deductions, and $120 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.

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Answer:

The Journal entry is as follows:

Sales salary expense A/c          Dr.  $35,000

To FICA social security tax                               $2,170

To FICA medicare tax                                        $507.50

To federal income tax                                        $6,500

To medical insurance deduction                        $772.50

To union dues                                                      $120

To sales salaries payable                                    $24,930

(To record the employee payroll for the period)

Notes:

FICA social security tax  = $35,000 × 6.2%

                                        = $2,170

FICA medicare tax  = $35,000 × 1.45%

                                 = $507.50

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