I know the answer is $1,370, but I need to know to calculate it. I\'m missing so

Question

I know the answer is $1,370, but I need to know to calculate it. I'm missing something. Thanks,

Assuming no employees are subject to ceilings for their earnings, Jensen Company has the following information for the pay period of January 15 - 31, 20xx.

Gross payroll

$10,000

Federal income tax withheld

$1,800

Social security rate

6%

Federal unemployment tax rate

.8%

Medicare rate

1.5%

State unemployment tax rate

5.4%

Assuming that all wages are subject to federal and state unemployment taxes, the Payroll Taxes Expense would be recorded as:
A. $1,370
B. $750
C. $620
D. $2,870

Gross payroll

$10,000

Federal income tax withheld

$1,800

Social security rate

6%

Federal unemployment tax rate

.8%

Medicare rate

1.5%

State unemployment tax rate

5.4%

Explanation / Answer

Correct option is C. $620

Justification:

Out of the above taxes, the Employer is liable to pay Federal Unemployment Tax & State Unemployment Tax payable on the wages of an employee, from his/her own income. Hence it is an expense for employer.

Others taxes shall be deducted from the wages of employee.

As such he Payroll Taxes Expense would be recorded as $ 620 =( $540 + $80)

SN Particulars Workings Person who bear the tax libility a Groos pay $10,000 b Taxes i) Social Security tax $10000 x 6% = $600 Employee ii) Medicare is 1.5% or or $150 $10000 x 1.5% = $150 Employee iii) Federal Income Tax Given data = $1,800    Employee iv)Federal Unemployment Tax $10000 x 0.8% = $80 Employer v) State Unemployment Tax    $10000 x 5.4% = $540 Employer

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