New York has an annual payroll of $ 140 comma 000. In addition, the company incurs payroll tax expense of 7% of the annual payroll. At December 31, New York owes salaries of $ 7 comma 600 and FICA and other payroll tax of $ 650. The company will pay these amounts early next year. Requirement 1. Show what New York will report for the foregoing on its income statement for the year and on its yea

Explanation:

wages and salaries $140,000.00

Payroll Tax Expenses ($140,000 x 7%) = $9800.00

Current liabilities

Salaries payable $7600.00

FICA and Other

Taxes payable $650.00

= $8250.00

Payroll expense = $140,000

Payroll tax expense = $9800

Explanation: An income statement is a part of the financial statement that reflects the income and expenses of an organisation.

When an expense is incurred, regardless of it being paid, it is recorded on the income statement. Likewise an income is recognised when earned regardless of its receipt.

Total payroll expense for the year is $140,000

Payroll tax expense is $9800 (7% × 140,000)

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