Question: Fitzgerald Company pays its employees every other Friday.

To accrue the wages and payroll taxes at December 31, 2020, we need to recognize the expense and the liability for the wages and payroll taxes earned but not yet paid or withheld. Here's the journal entry:

Accrued Wages and Payroll Taxes:

Wages Expense $56,000

Payroll Tax Expense $7,576

Accrued Wages Payable $56,000

Employee Income Tax Payable $7,834

FICA Tax Payable $6,300

Explanation:

The wages expense for the 11-day period from December 20 to December 30, 2020, is calculated as follows:

Daily wage expense = $112,000 / 14 days = $8,000 per day

Wages earned from December 20 to December 30 = 11 days x $8,000 per day = $88,000

The remaining 3 days' wages (December 31, 2020, through January 2, 2021) will be paid in the next payroll, so we don't need to accrue them.

For payroll taxes, we need to calculate the employee income tax and FICA tax for the 11-day period:

Employee income tax withheld per day = $15,610 / 14 days = $1,115 per day

Employee income tax for December 20 to December 30 = 11 days x $1,115 per day = $12,265

FICA tax withheld per day = $12,600 / 14 days = $900 per day

FICA tax for December 20 to December 30 = 11 days x $900 per day = $9,900

Adding up the income tax and FICA tax gives a total payroll tax expense of $22,165.

Therefore, the journal entry to accrue the wages and payroll taxes at December 31, 2020, is:

Debit wages expense for $56,000

Debit payroll tax expense for $7,576

Credit accrued wages payable for $56,000

Credit employee income tax payable for $7,834 ($12,265 - $4,431 already paid)

Credit FICA tax payable for $6,300 ($9,900 - $3,600 already paid)