Chapter 11, Problem 6BTN

To determine

Introduction:

Salaries and Tax deductions:

• Salaries expense for an employer comprises of cost of salaries paid and cost of employee benefits and payroll taxes incurred.
• Cost of employee benefits and payroll taxes incurred consist of FICA Tax i.e. Federal Insurance Contributions Act Tax, Unemployment tax, insurance expenses and retirement benefits expense incurred for the employees.
• Net salary is calculated as Gross Salary Less Cost of employee benefits and payroll taxes incurred. FICA Tax is calculated as 6.2 % Social Security and 1.45% Medicare totaling up to 7.65% for both employer and employee for a total FICA Tax of 15.30%
• Unemployment tax comprises of 6% Federal Unemployment Tax and State Unemployment Tax at 5.4%.

Details of Statement of Social Security regarding earnings history and future benefits.