Wage and Tax Statement Data on Employer FICA Tax Ehrlich Co. began business on J

Question

Wage and Tax Statement Data on Employer FICA Tax

Ehrlich Co. began business on January 2, 20Y8. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of the month receives half the monthly salary for that month. All required payroll tax reports were filed, and the correct amount of payroll taxes was remitted by the company for the calendar year. Early in 20Y9, before the Wage and Tax Statements (Form W-2) could be prepared for distribution to employees and for filing with the Social Security Administration, the employees' earnings records were inadvertently destroyed.

None of the employees resigned or were discharged during the year, and there were no changes in salary rates. The social security tax was withheld at the rate of 6.0% and Medicare tax at the rate of 1.5%. Data on dates of employment, salary rates, and employees’ income taxes withheld, which are summarized as follows, were obtained from personnel records and payroll records:

Required:

1. Calculate the amounts to be reported on each employee's Wage and Tax Statement (Form W-2) for 20Y8.

Note: Round amounts to the nearest whole dollar and enter all amounts as positive values.

2. Calculate the following employer payroll taxes for the year: (a) social security; (b) Medicare; (c) state unemployment compensation at 5.4% on the first $10,000 of each employee’s earnings; (d) federal unemployment compensation at 0.6% on the first $10,000 of each employee’s earnings; (e) total.

Note: Round amounts to the nearest whole dollar and enter all amounts as positive values.

Employee Date First
Employed Monthly
Salary Monthly Income
Tax Withheld Arnett Jan. 2 $3,200 $448 Cruz Oct. 1 5,400 972 Edwards Apr. 16 2,700 338 Harvin Nov. 1 2,400 300 Nicks Jan. 16 5,800 1,305 Shiancoe Dec. 1 3,400 527 Ward Feb. 1 6,400 1,376

Explanation / Answer

1.Amounts to be reported on each employee's Wage and Tax Statement (Form W-2) for 20Y8. Employee Date Employed No.of months To Dec.31 Monthly Salary Gross Earnings Mthly. Federal Income Tax Withheld Total tax with-held Social Security Tax withheld Medicare Tax withheld Net Earnings 1 2 3 4=2*3 5 6=2*5 7=4*6% 8=4*1.5% 9=4-6-7-8 Arnett Jan. 2 12 3200 38400 448 5376 2304 576 30144 Cruz Oct. 1 3 5400 16200 972 2916 972 243 12069 Edwards Apr. 16 8.5 2700 22950 338 2873 1377 344.25 18355.75 Harvin Nov. 1 2 2400 4800 300 600 288 72 3840 Nicks Jan. 16 11.5 5800 66700 1305 15008 4002 1001 46690 Shiancoe Dec. 1 1 3400 3400 527 527 204 51 2618 Ward Feb. 1 11 6400 70400 1376 15136 4224 1056 49984 TOTAL 222850 42436 13371 3343 163701 2.       Employer Payroll taxes (a) social security (b) Medicare (c) state unemployment compensation at 5.4% on the first $10,000 of each employee’s earnings (d) federal unemployment compensation at 0.6% on the first $10,000 of each employee’s earnings; (e) total. a b c d e 2304 576 540 60 3480 972 243 540 60 1815 1377 344 540 60 2321 288 72 259 29 648 4002 1001 540 60 5603 204 51 184 20 459 4224 1056 540 60 5880 13371 3343 3143 349 20206

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