Fukushima Company provides its employees with vacation benefits and a defined contribution pension plan. Employees earned vacation pay

Fukushima Company provides its employees with vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $19,500 for the period. The pension plan requires a contribution to the plan administrator equal to 6% of employee salaries. Salaries were $260,000 during the period. Provide the journal entry for the (a) vacation pay and (b) pension benefit.


Answer:











a.
 Vacation Pay Expense 19,500
Vacation Pay Payable 19,500
Vacation pay accrued for the period.
b.
 Pension Expense 15,600
Cash 15,600
To record pension contribution,
6% × $260,000.




The payroll register of Longboat Co. indicates $5,400 of social security withheld and $1,350 of Medicare tax withheld on total salaries of $90,000 for the period. Earnings of $10,000 are subject to state and federal unemployment compensation taxes at the federal rate of 0.8% and the state rate of 5.4%. Provide the journal entry to record the payroll tax expense for the period.


Answer:










Payroll Tax Expense 7,370
Social Security Tax Payable 5,400
Medicare Tax Payable 1,350
State Unemployment Tax Payable* 540
Federal Unemployment Tax Payable** 80
* $10,000 × 5.4%
** $10,000 × 0.8%