Chapter 11, Problem 3APSA

To determine

Concept Introduction:

Employee FICA Taxes:

Employee FICA taxes are withheld from salaries by employers to cover Social Security Taxes which is used to cover post retirement or disability expenses and Medicare taxes used to cover medical expenses.

Employer Payroll Taxes An employer needs to pay Employer FICA tax which is 6.2% Social Security tax and 1.45% Medicare tax in addition to employee salary. Also, they need to pay State and Federal Unemployment Taxes.

Requirement 1:

To Calculate:

The FICA Social Security Taxes Payable withholding of each employee

Answer to Problem 3APSA

Employee	FICA Social Security Tax
Dali	68.2
Trey	55.8
Kiesha	27.9
Chee	24.8
Total	176.7

Explanation of Solution

FICA social security tax is payable @6.2% on income up to $128,400

Employee	Gross Pay through Aug	Gross Pay in current week	Gross Pay on which FICA social security tax needs to be paid	FICA social security tax needs to be paid
Dali	127300	2000	$128400-127300=1100$	$1100*6.2\%=68.2$
Trey	127500	900	$128400-127500=900$	$900*6.2\%=55.8$
Kiesha	6900	450	450	$450*6.2\%=27.9$
Chee	1250	400	400	$400*6.2\%=24.8$

Thus, the FICA Social Security Taxes have been computed for each employee.

To determine

Concept Introduction:

Employee FICA Taxes:

Employee FICA taxes are withheld from salaries by employers to cover Social Security Taxes which is used to cover post retirement or disability expenses and Medicare taxes used to cover medical expenses.

Employer Payroll Taxes An employer needs to pay Employer FICA tax which is 6.2% Social Security tax and 1.45% Medicare tax in addition to employee salary. Also, they need to pay State and Federal Unemployment Taxes.

Requirement 2:

To Calculate:

The FICA Medicare Taxes Payable withholding of each employee

Answer to Problem 3APSA

Employee	Employee FICA Medicare Tax
Dali	29
Trey	13.05
Kiesha	6.53
Chee	5.8
Total	54.38

Explanation of Solution

Employee FICA Medicare Taxes are computed @1.45% of gross pay

Employee	Gross Pay in current week	FICA Medicare Tax
Dali	2000	$2000*1.45\%=29$
Trey	900	$900*1.45\%=13.05$
Kiesha	450	$450*1.45\%=6.53$
Chee	400	$400*1.45\%=5.8$

Thus, the Employee FICA Medicare Tax for each employee has been computed .

To determine

Concept Introduction:

Employee FICA Taxes:

Employee FICA taxes are withheld from salaries by employers to cover Social Security Taxes which is used to cover post retirement or disability expenses and Medicare taxes used to cover medical expenses.

Employer Payroll Taxes An employer needs to pay Employer FICA tax which is 6.2% Social Security tax and 1.45% Medicare tax in addition to employee salary. Also, they need to pay State and Federal Unemployment Taxes.

Requirement 3:

To Calculate:

The FICA Social Security Taxes Payable by the Employer

Answer to Problem 3APSA

Employee	Employer FICA Social Security Tax
Dali	68.2
Trey	55.8
Kiesha	27.9
Chee	24.8
Total	176.70

Explanation of Solution

FICA social security tax is payable @6.2% on income up to $128,400

Employee	Gross Pay through Aug	Gross Pay in current week	Gross Pay on which FICA social security tax needs to be paid	Employer FICA social security tax needs to be paid
Dali	127300	2000	$128400-127300=1100$	$1100*6.2\%=68.2$
Trey	127500	900	$128400-127500=900$	$900*6.2\%=55.8$
Kiesha	6900	450	450	$450*6.2\%=27.9$
Chee	1250	400	400	$400*6.2\%=24.8$

Thus, the Employer FICA Social Security Taxes have been computed.

To determine

Concept Introduction:

Employee FICA Taxes:

Employee FICA taxes are withheld from salaries by employers to cover Social Security Taxes which is used to cover post retirement or disability expenses and Medicare taxes used to cover medical expenses.

Employer Payroll Taxes An employer needs to pay Employer FICA tax which is 6.2% Social Security tax and 1.45% Medicare tax in addition to employee salary. Also, they need to pay State and Federal Unemployment Taxes.

Requirement 4:

To Calculate:

The FICA Medicare Taxes Payable by the Employer

Answer to Problem 3APSA

Employee	Employee FICA Medicare Tax
Dali	29
Trey	13.05
Kiesha	6.53
Chee	5.8
Total	54.38

Explanation of Solution

Employee FICA Medicare Taxes are computed @1.45% of gross pay

Employee	Gross Pay in current week	FICA Medicare Tax
Dali	2000	$2000*1.45\%=29$
Trey	900	$900*1.45\%=13.05$
Kiesha	450	$450*1.45\%=6.53$
Chee	400	$400*1.45\%=5.8$

Thus, the Employer FICA Medicare Tax has been computed .

To determine

Concept Introduction:

Employee FICA Taxes:

Employee FICA taxes are withheld from salaries by employers to cover Social Security Taxes which is used to cover post retirement or disability expenses and Medicare taxes used to cover medical expenses.

Employer Payroll Taxes An employer needs to pay Employer FICA tax which is 6.2% Social Security tax and 1.45% Medicare tax in addition to employee salary. Also, they need to pay State and Federal Unemployment Taxes.

Requirement 5:

To Calculate:

The Employer FUTA Taxes Payable by the Employer

Answer to Problem 3APSA

Employee	Employer FUTA Tax
Dali	0
Trey	0
Kiesha	0.6
Chee	2.40
Total	3.00

Explanation of Solution

Employer FUTA Taxes are computed @0.6% of first $7,000

Employee	Gross Pay through Aug	Gross Pay in current week	Gross Pay on which employer FUTA tax needs to be paid	Employer FUTA Tax
Dali	127300	2000	0 as Gross Income >7,000	0
Trey	127500	900	0 as Income >7,000	0
Kiesha	6900	450	$7000-6900=100$	$100*0.6\%=0.60$
Chee	1250	400	400	$400*0.6\%=2.4$

Thus, the Employer FUTA Tax has been computed .

To determine

Concept Introduction:

Employee FICA Taxes:

Employee FICA taxes are withheld from salaries by employers to cover Social Security Taxes which is used to cover post retirement or disability expenses and Medicare taxes used to cover medical expenses.

Employer Payroll Taxes An employer needs to pay Employer FICA tax which is 6.2% Social Security tax and 1.45% Medicare tax in addition to employee salary. Also, they need to pay State and Federal Unemployment Taxes.

Requirement 6:

To Calculate:

The Employer SUTA Taxes Payable by the Employer

Answer to Problem 3APSA

Employee	Employer SUTA Tax
Dali	0
Trey	0
Kiesha	5.4
Chee	21.60
Total	27.00

Explanation of Solution

Employer SUTA Taxes are computed @5.4% of first $7,000

Employee	Gross Pay through Aug	Gross Pay in current week	Gross Pay on which employer SUTA tax needs to be paid	Employer SUTA Tax
Dali	127300	2000	0 as Gross Income >7,000	0
Trey	127500	900	0 as Income >7,000	0
Kiesha	6900	450	$7000-6900=100$	$100*5.4\%=5.4$
Chee	1250	400	400	$400*5.4\%=21.60$

Thus, the Employer SUTA Tax has been computed .

To determine

Concept Introduction:

Employee FICA Taxes:

Employee FICA taxes are withheld from salaries by employers to cover Social Security Taxes which is used to cover post retirement or disability expenses and Medicare taxes used to cover medical expenses.

Employer Payroll Taxes An employer needs to pay Employer FICA tax which is 6.2% Social Security tax and 1.45% Medicare tax in addition to employee salary. Also, they need to pay State and Federal Unemployment Taxes.

Requirement 7:

To Calculate:

The net take home pay of each employee

Answer to Problem 3APSA

Employee	Net Pay $
Dali	1598.80
Trey	666.15
Kiesha	356.58
Chee	319.40
Total	2,940.93

Explanation of Solution

Employee	Gross Pay in current week (a)	FICA Social Security Tax (b)	Employee FICA Medicare Tax (c)	Income Tax Withheld (d)	Insurance Expenses (e)	Employee Take home expenses (a-b-c-d-e)
Dali	2000	68.2	29	284	20	1598.80
Trey	900	55.8	13.05	145	20	666.15
Kiesha	450	27.9	6.53	39	20	356.58
Chee	400	24.8	5.8	30	20	319.40
	3750	176.7	54.38	498	80	2,940.93

Thus, the net pay for each employee has been computed.

To determine

Concept Introduction:

Employee FICA Taxes:

Employee FICA taxes are withheld from salaries by employers to cover Social Security Taxes which is used to cover post retirement or disability expenses and Medicare taxes used to cover medical expenses.

Employer Payroll Taxes An employer needs to pay Employer FICA tax which is 6.2% Social Security tax and 1.45% Medicare tax in addition to employee salary. Also, they need to pay State and Federal Unemployment Taxes.

Requirement 8:

To Calculate:

The employer's payroll related expense

Answer to Problem 3APSA

Employee	Total Payroll Expenses $
Dali	2297.20
Trey	1080.85
Kiesha	566.43
Chee	526.60
Total	4,471.08

Explanation of Solution

Employer Payroll expenses include the Gross Salaries and all the State and Federal Taxes and other benefits payable to the employees by the employer.

Employee	Gross Pay in current week (a)	Employer FICA Social Security Tax (b)	Employer FICA Medicare Tax (c)	Employer FUTA Taxes (d)	Employer SUTA Taxes(e)	Insurance Expenses (f)	Contribution to pension @8% of gross Pay (g)	Payroll expenses (a +b+c+d+e+f+g)
Dali	2000	68.2	29	0	0	40	160	2297.20
Trey	900	55.8	13.05	0	0	40	72	1080.85
Kiesha	450	27.9	6.53	0.6	5.4	40	36	566.43
Chee	400	24.8	5.8	2.40	21.60	40	32	526.60
	3750	176.7	54.38	3.00	27.00	160	300	4,471.08

Thus, the employer's total payroll expenses relating to each employee has been computed.