1. Record the employee salary expense, withholdings, and salaries payable — During January Luxury Cruise Lines incurs million are 229 500 for portion

During January, Luxury Cruise Lines incurs employee salaries of $3 million. Withholdings in January are $229,500 for the employee portion of FICA, $450,000 for federal income tax, $187,500 for state income tax, and $30,000 for the employee portion of health insurance (payable to Blue Cross/Blue Shield). The company incurs an additional $186,000 for federal and state unemployment tax and $90,000 for the employer portion of health insurance.

Required:

1. Record the employee salary expense, withholdings, and salaries payable.

2. Record the employer-provided fringe benefits.

3. Record the employer payroll taxes.

SOLUTION

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January 31
Salaries Expense	3,000,000
Income Tax Payable		637,500
FICA Tax Payable		229,500
Accounts Payable (to Blue Cross/Blue Shield)	Accounts Payable (to Blue Cross/Blue Shield)	30,000
Salaries Payable (to balance)		2,103,000
(Employee salary expense and withholdings)	(Employee salary expense and withholdings)

January 31
Salaries Expense (fringe benefits)	90,000
Accounts Payable (to Blue Cross/Blue Shield)	Accounts Payable (to Blue Cross/Blue Shield)	90,000
(Employer-provided fringe benefits)

January 31
Payroll Tax Expense	415,500
FICA Tax Payable		229,500
Unemployment Tax Payable		186,000
(Employer payroll taxes)