FICA is the for Social Security of 12.4% and Medicare of 2.95% which will be paid half by the employer and half by the employee. However, independent contractors will pay only 6.2% for Social Security and 1.45% for Medicare to the Federal Government. a) True b) FICA is mandatory c) False d) Independent Contractors do not pay FICA
FICA is the for Social Security of 12.4% and Medicare of 2.95% which will be paid half by the employer and half by the employee. However, independent contractors will pay only 6.2% for Social Security and 1.45% for Medicare to the Federal Government. a) True b) FICA is mandatory c) False d) Independent Contractors do not pay FICA
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 15EA: In EA14, you prepared the journal entries for the employee of Toren Inc. You have now been given the...
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Question
FICA is the for Social Security of 12.4% and Medicare of 2.95% which will be paid half by the employer and half by the employee. However, independent contractors will pay only 6.2% for Social Security and 1.45% for Medicare to the Federal Government.
a) True
b) FICA is mandatory
c) False
d) Independent Contractors do not pay FICA
![During January 2021, ABC Inc. incurs employee salaries
of $3,000,000. Federal income tax withholding was
$450,000, State income tax was $187,500, and $30,000
for the employee portion of health insurance (payable to
Blue Cross). The employer portion for Health Care was
$90,000.
1. Record the employee salary expense, withholdings
including FICA (Emplyees' responsibility: Social
Security 6.2% and Medicare 1.45% of the gross
pay), and salaries payable for January 2021
2. Record the employer-provided fringe benefits.
3. Record the employer payroll taxes (Emplyers'
responsibility: Social Security 6.2% and Medicare
1.45% of the gross pay) (assuming no employee
passed the $7000 income limit on this first month
of January for FUTA 0.6% and SUTA 5.4%
combined 6% of the first $7000 annual income)
When ready, after preparing Journal Entries on paper,
answer the following questions.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F59aee2bb-f991-4260-9a22-993f209d765c%2Fcec2ca5a-df2d-4bef-9b72-30b4007f85a1%2Fde3dry_processed.jpeg&w=3840&q=75)
Transcribed Image Text:During January 2021, ABC Inc. incurs employee salaries
of $3,000,000. Federal income tax withholding was
$450,000, State income tax was $187,500, and $30,000
for the employee portion of health insurance (payable to
Blue Cross). The employer portion for Health Care was
$90,000.
1. Record the employee salary expense, withholdings
including FICA (Emplyees' responsibility: Social
Security 6.2% and Medicare 1.45% of the gross
pay), and salaries payable for January 2021
2. Record the employer-provided fringe benefits.
3. Record the employer payroll taxes (Emplyers'
responsibility: Social Security 6.2% and Medicare
1.45% of the gross pay) (assuming no employee
passed the $7000 income limit on this first month
of January for FUTA 0.6% and SUTA 5.4%
combined 6% of the first $7000 annual income)
When ready, after preparing Journal Entries on paper,
answer the following questions.
Expert Solution
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FICA stands for the Federal Contribution Act which is used in U.s for social security and Medicare programs. It's paid by employer and employees both.
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