Sky Company employed Tom Mills in Year 1. Tom earned $5,800 per month and worked the entire year. Assume the Social Security taxrate is 6 percent for the first $130,000 of earnings, and the Medicare tax rate is 1.5 percent. Tom's federal income tax withholdingamount is $920 per month. Use 5.4 percent for the state unemployment tax rate and 0.6 percent for the federal unemployment taxrate on the first $7,000 of earnings per employee.Requireda. Answer the following questions:1. What is Tom's net pay per month?2. What amount does Tom pay monthly in FICA taxes?3. What is the total payroll tax expense for Sky Company for January, Year 1? February, Year 1? March, Year 1? December, Year 1?b. Assume that instead of $5,800 per month Tom earned $11,300 per month. Based on this new level of income Tom's new federalincome tax withholding is $2,200. Answer the following questions.1. What is Tom's net pay per month?2. What amount does Tom pay monthly in FICA payroll taxes?3. What is the total payroll tax expense for Sky Company for January, Year 1? February, Year 1? March, Year 1? December, Year 1?Complete this question by entering your answers in the tabs below.Required A1Required A2Tom's net payRequired A3 Required B1 Required B2What is Tom's net pay per month?Note: Round your answer to 2 decimal places.per monthRequired A1Required B3Required A2

Please find the all necessary calculations in the below steps.

a. Answer the following questions: 1. What is Tom's net pay per month? 2. What amount does Tom pay monthly in FICA taxes? 3. What is the total payroll tax expense for Sky Company for January, Year 1? February, Year 1? March, Year 1? December, Year 1?

a. Answer the following questions: 1. What is Tom's net pay per month? 2. What amount does Tom pay monthly in FICA taxes? 3. What is the total payroll tax expense for Sky Company for January, Year 1? February, Year 1? March, Year 1? December, Year 1?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Sky Company employed Tom Mills in Year 1. Tom earned $5,800 per month and worked the entire year. Assume the Social Security tax
rate is 6 percent for the first $130,000 of earnings, and the Medicare tax rate is 1.5 percent. Tom's federal income tax withholding
amount is $920 per month. Use 5.4 percent for the state unemployment tax rate and 0.6 percent for the federal unemployment tax
rate on the first $7,000 of earnings per employee.
Required
a. Answer the following questions:
1. What is Tom's net pay per month?
2. What amount does Tom pay monthly in FICA taxes?
3. What is the total payroll tax expense for Sky Company for January, Year 1? February, Year 1? March, Year 1? December, Year 1?
b. Assume that instead of $5,800 per month Tom earned $11,300 per month. Based on this new level of income Tom's new federal
income tax withholding is $2,200. Answer the following questions.
1. What is Tom's net pay per month?
2. What amount does Tom pay monthly in FICA payroll taxes?
3. What is the total payroll tax expense for Sky Company for January, Year 1? February, Year 1? March, Year 1? December, Year 1?
Complete this question by entering your answers in the tabs below.
Required A1
Required A2
Tom's net pay
Required A3 Required B1 Required B2
What is Tom's net pay per month?
Note: Round your answer to 2 decimal places.
per month
Required A1
Required B3
Required A2

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Step 2: Answer (A1) - Calculation of Tom's Net Pay Per Month.

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Step 3: Answer (A2) - Calculation of Tom's Monthly FICA Payroll Taxes.

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Step 4: Answer (A3) - Calculation of Total Payroll Tax Expense for SKY Company.

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Step 5: Answer (B1) - Calculation of Tom's Net Pay Per Month.

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Step 6: Answer (B2) -Calculation of Tom's Monthly FICA Payroll Taxes.

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