BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $127,200 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 3.1% and SUTA taxes are 2.9% of the first $7,000 paid to its employee.

a.

                Taxes to be withheld from Gross Pay (Employee - Paid Taxes)

                                      September Earnings      Tax Rate         Tax Amount

                                             Subject to Tax

Federal Income tax                                                                            $80.00

FICA - Social Security                800                       6.20%                $49.60

FICA - Medicare                          800                      1.45%                 $11.60

Total                                                                                                   $141.20

FICA - Social Security = 800 * 6.2% = $49.60

FICA - Medicare = 800 * 1.45% = $11.60

b.

Date             General Journal                                           Debit            Credit

Sep 30          Salaries Expense                                       $800

                     Federal income tax payable                                             $80

                     FICA taxes Payable - Social Security                               $49.60

                     FICA taxes Payable - Medicare                                        $11.60

                     Salaries Payable                                                               $658.80

Salaries Payable = 800 - 80 - 49.60 - 11.60 = $658.80

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