Action Travel has 10 employees each working 40 hours per week and earning $20 an hour. Federal income taxes are withheld at 15% and state income taxes at 6%. FICA taxes are 7.65% and unemployment taxes are 3.8% of the first $7,000 earned per employee. What is the actual payroll payment (Salaries Payable) for the first week of January

The actual payroll payment involves deducting from the gross pay of the 10 employees the federal income taxes at 15%,state income taxes at 6% as well as the FICA taxes at 7.65%.

The actual payroll payment implies the actual cash handed to the employees or credited to their bank accounts at the end of the month,which is computed below:

Total payroll expense (10*40*$20) $8,000

Federal income taxes(15%*$8000) ($1,200)

State income taxes(6%*$8000) ($480)

FICA taxes(7.65%*$8,000) ($612 )

Actual payroll payment $5,708