Use the following tax rates, ceiling and maximum taxes:Employee and Employer OASDI:6.20%$137,700$8,537.40Employee* and Employer HI:1.45%No limitNo maximumSelf-employed OASDI:12.4%$137,700$17,074.80Self-employed HI:2.9%No limitNo maximum*Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed.Rounding Rules: Unless instructed otherwise compute hourly rate and overtime rates as follows:Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the overtime rate).If the third decimal place is 5 or more, round to the next higher cent.If the third decimal place is less than 5, drop the third decimal place.Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow.Ralston is the sole proprietor of Cut & Curl. During the year, his net earnings were $79,700. What are his self-employment taxes (OASDI and HI) on these earnings? Round your answer to the nearest cent.$___________

Tax represents the liability that is reported in the balance sheet of the company.

Answered: Use the following tax rates, ceiling…

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

Use the following tax rates, ceiling and maximum taxes:
Employee and Employer OASDI:	6.20%	$137,700	$8,537.40
Employee* and Employer HI:	1.45%	No limit	No maximum
Self-employed OASDI:	12.4%	$137,700	$17,074.80
Self-employed HI:	2.9%	No limit	No maximum

*Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed.

Rounding Rules: Unless instructed otherwise compute hourly rate and overtime rates as follows:

Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the overtime rate).
If the third decimal place is 5 or more, round to the next higher cent.
If the third decimal place is less than 5, drop the third decimal place.

Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow.

Ralston is the sole proprietor of Cut & Curl. During the year, his net earnings were $79,700. What are his self-employment taxes (OASDI and HI) on these earnings? Round your answer to the nearest cent.
$___________

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