As you learned in the previous chapter, Kipley Company is a small manufacturing firm located in Pittsburgh, Pennsylvania. The company has a workforce of both hourly and salaried employees. In the last chapter, gross wages were computed for each employee. Adjacent to their name, each employee's gross wages are shown in the Payroll Register.The next task is computing the FICA withholding for each employee and the employer's liability.Requirements:Compute the OASDI for each employee.Compute the HI for each employee.On the Employer Register, compute the employer FICA liability. Taxable EarningsIn the Totals row, complete the following1. Enter the earnings upon which the employer FICA liability will be computed.2. Compute the employer OASDI liability, using 6.2%.3. Compute the employer HI liability, using 1.45%.Note: Round your final answers to the nearest cent.KIPLEY COMPANY, INC.Taxable EarningsPayroll TaxesEarningsOASDIHIFUTASUTATotals Payroll RegisterComplete the steps below:1. Compute the OASDI for each employee.2. Compute the HI for each employee.3. Compute the totals for each tax.Note: Round your final answers to the nearest cent.KIPLEY COMPANY, INC.Employee Payroll RegisterFor Period Ending January 8, 20--EARNINGSDEDUCTIONSNET PAYNameGrossOASDIHIFITSITSUTACITSIMPLEGrp. Ins.Health Ins.Ck. No.AmountCarson, F.$700.00$Wilson, W.897.04Utley, H.678.75Fife, L.877.10Smith, L.790.00Fay, G.539.15Robey, G.623.08Schork, T.773.08Hardy, B.666.11Kipley, C.1,000.00Totals----

The OASDI and HI for each employee is calculated as given below, OASDI is set at 12.4% of gross wages which is earned by the employee. The same has to be equally contributed by employee and employer, which means 6.2% each (i.e.) 6.2% will be deducted from employee wages and additionally 6.2% will be contributed from employer. HI is set at 2.90% of gross wages which is earned by the employee. The same has to be equally contributed by employee and employer, which means 1.45% each (same as OASDI).The OASDI and HI for each employee is tabulated below,As per above explanation, both OASDI & HI tax would be equally contributed from employer as well. Hence, the above tax total amounts of employee applies for employer too. Thus, Employer FICA liability would be, Employer FICA liability = Employee portion of OASDI + Employee portion of HI+Employer portion of OASDI+Employer portion of HI =$ 467.75+109.4+467.75+109.4 = $ 1,154.30 Thus, Employer FICA liability = $ 1,154.30

Answered: As you learned in the previous chapter,…

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

As you learned in the previous chapter, Kipley Company is a small manufacturing firm located in Pittsburgh, Pennsylvania. The company has a workforce of both hourly and salaried employees. In the last chapter, gross wages were computed for each employee. Adjacent to their name, each employee's gross wages are shown in the Payroll Register.

The next task is computing the FICA withholding for each employee and the employer's liability.

Requirements:

Compute the OASDI for each employee.
Compute the HI for each employee.
On the Employer Register, compute the employer FICA liability.

Taxable Earnings
In the Totals row, complete the following
1. Enter the earnings upon which the employer FICA liability will be computed.
2. Compute the employer OASDI liability, using 6.2%.
3. Compute the employer HI liability, using 1.45%.
Note: Round your final answers to the nearest cent.
KIPLEY COMPANY, INC.
Taxable Earnings
Payroll Taxes
Earnings
OASDI
HI
FUTA
SUTA
Totals

Payroll Register
Complete the steps below:
1. Compute the OASDI for each employee.
2. Compute the HI for each employee.
3. Compute the totals for each tax.
Note: Round your final answers to the nearest cent.
KIPLEY COMPANY, INC.
Employee Payroll Register
For Period Ending January 8, 20--
EARNINGS
DEDUCTIONS
NET PAY
Name
Gross
OASDI
HI
FIT
SIT
SUTA
CIT
SIMPLE
Grp. Ins.
Health Ins.
Ck. No.
Amount
Carson, F.
$700.00
$
Wilson, W.
897.04
Utley, H.
678.75
Fife, L.
877.10
Smith, L.
790.00
Fay, G.
539.15
Robey, G.
623.08
Schork, T.
773.08
Hardy, B.
666.11
Kipley, C.
1,000.00
Totals
----

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