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Sky Company employed To

Sky Company employed To

FINANCIAL ACCOUNTING
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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**Payroll Tax Calculation Exercise** Sky Company employed Tom Mills in Year 1. Tom earned $4,900 per month and worked the entire year. Assume the following tax rates: - **Social Security tax rate:** 6% for the first $110,000 of earnings - **Medicare tax rate:** 1.5% - **Federal income tax withholding amount:** $920 per month - **State unemployment tax rate:** 5.4% - **Federal unemployment tax rate:** 0.6% for 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 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? **b. If Tom instead earned $9,800 per month, answer the following:** 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? **Table: Total Employer Payroll Tax** | | Total Employer Payroll Tax | |----------------|-----------------------------| | **January** | $1,155.00 | | **February** | $735.00 | | **March** | $735.00 | | **December** | | *Assume that instead of $4,900 per month Tom earned $9,800 per month. What is the total payroll tax expense for Sky Company for January Year 1? February Year 1? March Year 1? December Year 1? (Round your answers to 2 decimal places.)*
Transcribed Image Text:**Payroll Tax Calculation Exercise** Sky Company employed Tom Mills in Year 1. Tom earned $4,900 per month and worked the entire year. Assume the following tax rates: - **Social Security tax rate:** 6% for the first $110,000 of earnings - **Medicare tax rate:** 1.5% - **Federal income tax withholding amount:** $920 per month - **State unemployment tax rate:** 5.4% - **Federal unemployment tax rate:** 0.6% for 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 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? **b. If Tom instead earned $9,800 per month, answer the following:** 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? **Table: Total Employer Payroll Tax** | | Total Employer Payroll Tax | |----------------|-----------------------------| | **January** | $1,155.00 | | **February** | $735.00 | | **March** | $735.00 | | **December** | | *Assume that instead of $4,900 per month Tom earned $9,800 per month. What is the total payroll tax expense for Sky Company for January Year 1? February Year 1? March Year 1? December Year 1? (Round your answers to 2 decimal places.)*
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