Bloy Corp.’s payroll for the pay period ended October 31, year 1, is summarized as follows: Department Payroll Total Wages Federal Income Tax Withheld Amount of Wages Subject to Payroll Taxes FICA Unemployment Factory $60,000 $7,000 $56,000 $18,000 Sales 22,000 3,000 16,000 2,000 Office 18,000 2,000 8,000 — $100,000 $ 12,000 $ 80,000 $ 20,000 Assume the following payroll tax rates: FICA for employer and employee 7% each Unemployment 3% What amount should Bloy accrue as its share of payroll taxes in its October 31, year 1 balance sheet?

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Answer:

The employer’s payroll taxes include the employer’s share of FICA taxes (7% x $80,000 = $5,600) and the unemployment taxes (3% x $20,000 = $600).

Therefore, Bloy should accrue $6,200 ($5,600 + $600) as its share of payroll taxes in its October 31, Year 4, balance sheet.