Excel Products Inc.pays its employees semimonthly.The summary of the payroll for December 31,indicated the following: 
For the year ended December 31,$40,000 of the December 31 payroll is subject to social security tax of 6.0%; $120,000 is subject to Medicare tax of 1.5%; $10,000 is subject to state unemployment tax of 4.3% and federal unemployment tax of 0.8%.As of January 1,of the following year,all of the $120,000 is subject to all payroll taxes.Prepare the journal entries for payroll tax expense if the employees are paid
(a)December 31 of the current year or
(b)January 2 of the following year.
Definitions:
Time Value
The viewpoint that money on hand today is considered more valuable than the same amount received in the future, due to potential earnings.
Money
A medium of exchange that facilitates trade, acting as a unit of account, a store of value, and sometimes, a standard of deferred payment.
Present Value Factors
Multipliers used in calculating the present value of a future cash flow, taking into account the time value of money and interest rates.
Future Value Factors
Future value factors are quantitative measures used in calculating the future value of an investment based on its present value, interest rate, and time period.
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