2-3Computing Graduated State Income TaxRather than a flat percentage rate, some states have what is known as a graduated income tax.This means that your state income tax is computed at a varying rate each time you reach a newincome level. The higher your income, the greater your tax.ExampleFind the amount of state income tax deducted from each paycheck.Carla Erpelding's annual salary is $28,500. She is paid biweekly. Her personal exemptions total$1,500. The state income tax is calculated on the following graduated basis: 2.5 percent of the first$25,000 and 3.5 percent over $25,000.1. Find the taxable wages.-($28,500 $1,500) = $27,0002. Find the annual tax withheld.First $25,000: = ($25,000 x .025) = $625Over $25,000 =($27,000-$25,000) x .035 = $2,000 x .035 = $70Annual Tax = $625+ $70 = $6953. Find the tax per period.Annual TaxNumber of Pay Periods per Year = Tax Withheld per Pay Period$695.00 ÷ 26 = $26.73 tax per pay periodPracticeUsing the following graduated income tax rates, find the tax withheld per pay period.State Tax Rate2.75%3.25%5.00%Annual Income EarnedFirst $10,000Next $15,000Over $25,0001. Annual salary: $38,550; personal exemptions: $4,400; paid biweekly. Pakl2. Annual salary: $47,425; personal exemptions: $3,000; paid weekly.3. Annual salary: $29,149; personal exemptions: $2,200; paid monthly.4. Annual salary: $24,872; personal exemptions: $1,500; paid semimonthly.5. Standardized Test Practice Mitchell Gomez is an auto mechanic. His annual gross salaryis $35,500. He is married with I dependent, allowing him $3,700 in yearly personalexemptions. If his state income tax is based on the following graduated rate, how muchis withheld from his semimonthly paycheck?State Tax Rate3.25%Annual Income EarnedFirst $15,0003.60%4.90%Next $15,000Over $30,000A. $46.49 B. $54.04 C. $92.98 D. $1,115.70Copyright by The McGraw-Hill Companies, Inc. All rights reserved.Section 2-3 Study Guide

Income tax: The income tax refers to the amount that is paid by the taxpayer to the tax authority of…

Using the following graduated income tax rates, find the tax withheld per pay period. State Tax Rate Annual Income Earned 2.75% 3.25% First $10,000 Next $15,000 Over $25,000 5.00% 1. Annual salary: $38,550; personal exemptions: $4,400; paid biweekly. 2. Annual salary: $47,425; personal exemptions: $3,000; paid weekly. 3. Annual salary: $29,149; personal exemptions: $2,200; paid monthly. 4. Annual salary: $24,872; personal exemptions: $1,500; paid semimonthly.

Using the following graduated income tax rates, find the tax withheld per pay period. State Tax Rate Annual Income Earned 2.75% 3.25% First $10,000 Next $15,000 Over $25,000 5.00% 1. Annual salary: $38,550; personal exemptions: $4,400; paid biweekly. 2. Annual salary: $47,425; personal exemptions: $3,000; paid weekly. 3. Annual salary: $29,149; personal exemptions: $2,200; paid monthly. 4. Annual salary: $24,872; personal exemptions: $1,500; paid semimonthly.

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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A-5
Assume that the social security tax rate is 6% and the Medicare tax rate is 1.5%. In the following summary of data for a payroll period, some amounts have been intentionally omitted: Earnings: 1. At regular rate ? 2. At overtime rate $64,000 3. Total earnings ? Deductions: 4. Social security tax 30,240 5. Medicare tax 7,560 6. Federal income tax withheld 128,000 7. Medical insurance 17,640 8. Union dues ? 9. Total deductions 190,190 10. Net amount paid 313,810 Accounts debited: 11. Factory Wages 264,000 12. Sales Salaries ? 13. Office Salaries 110,000 Required: a. Determine the amounts omitted in lines (1), (3), (8), and (12). b. On December 19, journalize the entry to record the payroll accrual.* c. On December 20, journalize the entry to record the payment of the payroll.*
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FEDERAL PAYROLL TAXES Bracket ($) 0-9,700 9,701 - 39,475 39,476-84,200 84,201 - 160,725 160,726 - 204,100 204,101 - 510,300 510,301 - Marginal Tax Rate 10% 12% 22% 24% 32% 35% 37% TABLE 1: 2019 single taxpayer brackets and rates Exercise 1: Suppose your taxable income is $50,000. Compute your federal income tax. Individual Taxpayers Income Tax Bracket ($) 0-9,700 9,701 - 39,475 39,476 - 84,200 84,201 - 160,725 160,726 - 204,100 204,101 - 510,300 510,301 - Taxes Owed 10% within bracket $970 + 12% within bracket $4,543 + 22% within bracket $14,382.50 +24% within bracket $32,738.50 +32% within bracket $46,628.50 +35% within bracket $153,798.50 +37% within bracket TABLE 2: 2019 tax brackets Exercise 2: Your taxable income is $50,000. Use Table 2 to recompute your federal income tax. Exercise 3: Your taxable income is $50,000. Compute your effective tax rate
Problem Information Use the following tax rates, celling 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: 1. 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-haif to determine the overtime rate). 2. If the third decimal place is 5 or more, round to the next higher cent. 3. If the third decimal place is less than 5, drop the third decimal place. Also, use the minimum hourty wage of $7.25 in solving these problems and all that follow. Jax Company's (a monthly depositor) tax lability (amount withheld from…
Example 4-9 From the above example, if you indicate separately on Robinson’s paycheck stub the amount of each payment, the amount of federal income tax to be withheld is computed as follows: Taxes Withheld Regular monthly earnings $2,400 $ 37.00 (from wage-bracket tax tables*) Quarterly bonus 4,600 1,012.00 ($4,600 × 22%) Totals $7,000 $ 1,049.00 The calculation of Robinson’s federal income tax for the quarter would be computed as follows: Taxes Withheld Regular monthly earnings $2,400 $37.00 × 3 months = $ 111.00 (from wage-bracket tables*) Quarterly bonus 4,600 1,012.00 ($4,600 × 22%) $1,123.00 *The percentage table could also be used. Note: OASDI and HI withholdings are calculated on total earnings per pay period multiplied by number of pay periods and then added together to arrive at a quarter’s total withholding. Quarterly and year-to-date information would appear on Robinson’s employee earnings record. The…
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. Dee is paid $2,345 on November 8, 20--. Dee had cumulative gross earnings, including…
Find the tax owed on a purchase of $183.11 if the state sales tax rate is 6%.
ournalize Payroll Tax The payroll register of Patel Heritage Co indicates $1,986 of social security withheld and $496.50 of Medicare tax withheld on total salaries of $33,100 for the period. Earnings of $9,600 are subject to state and federal unemployment compensation taxes at the federal rate of 0.8% and the state rate of 5.4%. Provide the journal entry to record the payroll tax expense for the period. If an amount box does not require an entry, leave it blank. Round to two decimal places. Payroll Tax Expense Payroll Tax Expense Social Security Tax Payable Social Security Tax Payable Medicare Tax Payable Medicare Tax Payable State Unemployment Tax Payable State Unemployment Tax Payable Federal Unemployment Tax Payable Federal Unemployment Tax Payable
A customer purchases $28.14 in prodcts only $12.83 is taxable. How much sales tax is owed if the tax rate is 10%?
1. Richard's monthly salary is $8,600. Income tax schedule First $3,000.. no tax $3,001 to $5,000....10% Above $5,000....28% Required: a) Compute his total income tax liability b) Compute his net pay