Current Liabilities and Payroll Accounting

For the year ended December 31, 2019, Denkinger Electrical Repair Company reports the following summary payroll data.

Denkinger Company's payroll taxes are Social Security tax 6.2%, Medicare tax 1.45%, state unemployment 2.5% (due to a stable employment record), and 0.8% federal unemployment. Gross earnings subject to Social Security taxes of 6.2% total $490,000, and gross earnings subject to unemployment taxes total $135,000.

Instructions

1. Prepare a summary journal entry at December 31 for the full year's payroll.
2. Journalize the adjusting entry at December 31 to record the employer's payroll taxes.
3. The W-2 Wage and Tax Statement requires the following dollar data.
   

Solution