Mest Company has nine employees. FICA Social Security taxes are 6.2% of the first $128,400 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. Cumulative pay for the current year for each of its employees follows. Employee Ken S Tim V Steve S Cumulative Pay $ 5,000 43,400 90,000 Employee Michelle W Michael M. Zach R Cumulative Pay $146,500 109,900 131,400 Employee Lori K Kitty O John W Cumulative Pay $133,900 39,900 7,000 a. Compute the amounts in this table for each employee. b. For the company, compute each total for FICA Social Security taxes, FICA Medicare taxes, FUTA taxes, and SUTA taxes.
Mest Company has nine employees. FICA Social Security taxes are 6.2% of the first $128,400 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. Cumulative pay for the current year for each of its employees follows. Employee Ken S Tim V Steve S Cumulative Pay $ 5,000 43,400 90,000 Employee Michelle W Michael M. Zach R Cumulative Pay $146,500 109,900 131,400 Employee Lori K Kitty O John W Cumulative Pay $133,900 39,900 7,000 a. Compute the amounts in this table for each employee. b. For the company, compute each total for FICA Social Security taxes, FICA Medicare taxes, FUTA taxes, and SUTA taxes.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Mest Company has nine employees. FICA Social Security taxes are 6.2% of the first $128,400 paid to each employee, and FICA
Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee.
Cumulative pay for the current year for each of its employees follows.
Employee Cumulative Pay
Ken S
$5,000
Tim V
Steve S
43,400
90,000
Employee
Michelle W
Michael M.
Zach R
Cumulative Pay
$146,500
109,900
131,400
Employee
Lori K
Kitty O
John W
Cumulative Pay
$133,900
39,900
7,000
a. Compute the amounts in this table for each employee.
b. For the company, compute each total for FICA Social Security taxes, FICA Medicare taxes, FUTA taxes, and SUTA taxes.
Expert Solution
Step 1
FICA and FUTA Taxes
FICA is a type of federal payroll tax in the US. Every paycheck is withheld under the Federal Insurance Contributions Act.
FICA taxes are an amalgam of the Medicare and Social Security taxes.
The FUTA payroll tax must be paid by employers in order for the nation's unemployment programmes to be supported.
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