Lightning Electronics is a midsize manufacturer of lithium batteries. The compan

Question

Lightning Electronics is a midsize manufacturer of lithium batteries. The company’s payroll records for the November 1–14 pay period show that employees earned wages totaling $56,000 but that employee income taxes totaling $7,600 and FICA taxes totaling $2,925 were withheld from this amount. The net pay was directly deposited into the employees’ bank accounts. 1. What was the amount of net pay? 2. Assuming Lightning Electronics must also pay $310 of unemployment taxes for this pay period, what amount would be reported as the total payroll costs?

Explanation / Answer

Net Pay to employees: Gross earnings of the employees: 56000 Less: Taxes withheld FICA taxes 2925 Income tax withheld 7600 10525 Net Pay to employees 45475 Total Payroll cost: Gross earnings paid to employees 56000 Add: Additional Payroll taxes expense FICA taxes 2925 Unemployment taxes 310 3235 Total Payroll cost: 59235 Note: Equal contribution need to be made by employer for FICA taxes

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