{"id":224164,"date":"2025-06-02T18:35:55","date_gmt":"2025-06-02T18:35:55","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=224164"},"modified":"2025-06-02T18:35:57","modified_gmt":"2025-06-02T18:35:57","slug":"helen-strands-regular-hourly-wage-rate-is","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/06\/02\/helen-strands-regular-hourly-wage-rate-is\/","title":{"rendered":"Helen Strand’s regular hourly wage rate is"},"content":{"rendered":"\n

Helen Strand’s regular hourly wage rate is
21 for work in excess of 40 hours. During a January pay period, Helen works 47 hours. Helen’s federal income tax withholding is $86, and she has no voluntary deductions. Assume that the FICA tax rate is 7.65%. Prepare the employer’s journal entry to record payroll taxes for the period. Ignore unemployment taxes. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Round answers to 2 decimal places, e.g. 15.15.) Date Account Titles and Explanation Jan. 15 Salaries and Wages Payable cash Debit Credit 566.71 Salaries and Wages Payable 566.71<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n

Employer\u2019s journal entry \u2013 to record the pay-period payroll taxes (no unemployment taxes)<\/strong><\/p>\n\n\n\n

Date<\/th>Account Titles & Explanation<\/th>Debit<\/th>Credit<\/th><\/tr><\/thead>
Jan. 15<\/td>Payroll Tax Expense<\/td>$54.08<\/strong><\/td><\/td><\/tr>
<\/td>FICA Taxes Payable \u2013 OASDI (Social Security)<\/td><\/td>$43.83<\/strong><\/td><\/tr>
<\/td>FICA Taxes Payable \u2013 Medicare<\/td><\/td>$10.25<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

(If your system uses a single liability account, credit \u201cFICA Taxes Payable $54.08\u201d instead of the two separate lines.)<\/em><\/p>\n\n\n\n

\n\n\n\n

Why these amounts are correct <\/h3>\n\n\n\n
    \n
  1. Determine the wages subject to FICA.<\/strong>
    Helen worked 47 hours in the period.
    Regular pay<\/em> = 40 h \u00d7 $14 = $560
    Overtime pay<\/em> = 7 h \u00d7 $21 = $147
    Gross earnings<\/strong> = $560 + $147 = $707 All $707 are subject to FICA because they are dramatically below the 2024 Social-Security wage base and Medicare has no cap.<\/li>\n\n\n\n
  2. Apply the employer FICA rates.<\/strong>
    • OASDI (Social Security)<\/strong> = 6.2 % of $707
      $707 \u00d7 0.062 = $43.834 \u2192 $43.83<\/strong> (rounded to cents).<\/li>
    • Medicare (HI)<\/strong> = 1.45 % of $707
      $707 \u00d7 0.0145 = $10.2515 \u2192 $10.25<\/strong>.<\/li><\/ul>Total employer FICA = $43.83 + $10.25 = $54.08<\/strong>.
      Remember: The 7.65 % rate (6.2 % + 1.45 %) is paid twice<\/strong>\u2014once by the employee (withheld from pay) and once by the employer (an additional payroll cost). The question asks only for the employer\u2019s portion.<\/li>\n\n\n\n
    • Prepare the journal entry.<\/strong>\n
        \n
      • Debit Payroll Tax Expense<\/strong> for the cost the company incurs ($54.08).<\/li>\n\n\n\n
      • Credit liability accounts<\/strong> because the taxes are owed to the federal government until they are remitted. Many textbooks split the credit into \u201cFICA Taxes Payable\u2014OASDI\u201d and \u201cFICA Taxes Payable\u2014Medicare\u201d to mirror how they must be reported on IRS Forms 941 and 940. Some software combines them into a single \u201cFICA Taxes Payable\u201d account\u2014the dollar total is the same.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
      • What is not included?<\/strong>\n
          \n
        • Employee withholdings (federal income tax $86 and the employee\u2019s own FICA $54.08) were booked in the payroll<\/em> entry that reduced Helen\u2019s net check ($566.91).<\/li>\n\n\n\n
        • Federal and state unemployment taxes (FUTA\/SUTA) are specifically excluded by the problem instruction.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n

          By matching the statutory 7.65 % employer share to the $707 wage base, the entry above correctly records the employer\u2019s legal payroll-tax obligation and recognizes the related expense in the period the wages were earned.<\/p>\n\n\n\n

          \"\"<\/figure>\n","protected":false},"excerpt":{"rendered":"

          Helen Strand’s regular hourly wage rate is21 for work in excess of 40 hours. During a January pay period, Helen works 47 hours. Helen’s federal income tax withholding is $86, and she has no voluntary deductions. Assume that the FICA tax rate is 7.65%. Prepare the employer’s journal entry to record payroll taxes for the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-224164","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/224164","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=224164"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/224164\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=224164"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=224164"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=224164"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}