Payroll is usually the largest expense of a business. It is very important to kn

Question

Payroll is usually the largest expense of a business. It is very important to know what taxes to withhold and when they need to be paid. It is also very important to be able to record payroll transactions correctly.

This assessment assesses your ability to determine which taxes to withhold and how to record them correctly in your company books.

1. Payroll Problem

In addition to gross pay, the company must pay one-half of the $50 per employee weekly health insurance; each employee pays the remaining one-half. The company also contributes an extra 5% of each employee’s gross pay (at no cost to employees) to a pension fund. Employees also paid 6.88 per week in union dues with the exception of Ahmed since he is a supervisor.

Required:

Compute the following for the week ended September 30 (round amounts to the nearest cent).

1. Each employee’s FICA withholdings for Social Security.

Each employee’s FICA withholding for Medicare.

Employer’s FICA taxes for Social Security.

Employer’s FICA taxes for Medicare.

Employer’s FUTA taxes.

Employer’s SUTA taxes.

Each employee’s net (take-home) pay.

Employer’s total payroll-related expense for each employee.

Explanation / Answer

$ 4,683

1 Employees FICA withholding for Social Security @ 6.2% on first pay of $110,100. Gross pay Total Gross pay less than $110,100 Gross pay on which FICA Social Security Tax calculated FICA-Social Security Tax @ 6.2% (Gross pay*6.2%) Ahmed: $ 2,500 ($108,500+$2,500)= $111,000) ($2,500-$900)=$1,600 $ 99 Carlos $1,515 ($36,650+$1,515) $1,515 $ 94 June $ 475 ($6,650+$475)=$7,125 $475 $ 29 Marie $ 1,000 ($22,200+$1,000)=$23,200 $1,000 $ 62 Ahmed:($111,000-$110,100)=$900, 2 Employees FICA withholding for Medicare tax @ 1.45% on gross pay of employees. Gross pay FICA-Medicare Tax @ 1.45% (Gross pay*1.45%) Ahmed: $2,500 $36 Carlos $1,515 $ 22 June $ 475 $ 7 Marie $ 1,000 $ 15 3 Employers FICA withholding for Social Security @ 6.2% on first pay of $110,100. Gross pay Total Gross pay less than $110,100 Gross pay on which FICA Social Security Tax calculated FICA-Social Security Tax @ 6.2% (Gross pay*6.2%) Ahmed: $ 2,500 ($108,500+$2,500)= $111,000) ($2,500-$900)=$1,600 $99 Carlos $1,515 ($36,650+$1,515) $1,515 $94 June $ 475 ($6,650+$475)=$7,125 $475 $ 29 Marie $ 1,000 ($22,200+$1,000)=$23,200 $1,000 $62 Ahmed:($111,000-$110,100)=$900, 4 Employers FICA withholding for Medicare tax @ 1.45% on gross pay of employees. Gross pay FICA-Medicare Tax @ 1.45% (Gross pay*1.45%) Ahmed: $2,500 $36 Carlos $1,515 $22 June $475 $7 Marie $ 1,000 $15 5 Employers FUTA Taxes @ 0.8% and SUTA tax @ 1.75% on first $7,000 of pay Gross pay Total Gross pay Gross pay less than $7,000 FUTA Tax @ 0.8% Ahmed: $2,500 ($108,500+$2,500)= $111,000) $ -   Carlos $1,515 ($36,650+$1,515)=$38,165 $ -   June $475 ($6,650+$475)=$7,125 ($7,000-$6,650)=$350 ($350*0.8%)=$3 Marie $ 1,000 ($22,200+$1,000)=$23,200 $                       -   6 Employers SUTA tax @ 1.75% on first $7,000 of pay Gross pay Total Gross pay Gross pay less than $7,000 SUTA Tax @ 1.75% Ahmed: $ 2,500 ($108,500+$2,500)= $111,000) $ -   Carlos $1,515 ($36,650+$1,515)=$38,165 $ -   June $ 475 ($6,650+$475)=$7,125 ($7,000-$6,650)=$350 ($350*1.75%)=$6 Marie $ 1,000 ($22,200+$1,000)=$23,200 $ -  

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.