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Question
Chapter 11, Problem 9E
To determine
Payroll Taxes:
The taxes liable on wages earned by employees during specified period of time are payroll taxes.
To determine:
1. Prepare a table to compute the amounts of payroll taxes of each employee.
2. Compute the total for FICA Social Security taxes, FICA Medicare taxes, FUTA taxes, and SUTA taxes.
Expert Solution & Answer
Answer to Problem 9E
Solution:
1.
| Employee | Cumulative Pay | FICA Social Security | FICA Medicare | FUTA | SUTA |
| Ken S. | $6,000 | $372 | $87 | $36 | $324 |
| Tim. V | $60,200 | $3732.40 | $872.90 | $361.20 | $378 |
| Steve S. | $87,000 | $5,394 | $1,261.50 | $522 | $378 |
| Ann T. | $146,500 | $7,254 | $1,696.50 | $879 | $378 |
| Kathleen K. | $106,900 | $6,627.80 | $1,550.05 | $641.40 | $378 |
| Michelle H. | $117,000 | $7,254 | $1,696.50 | $702 | $378 |
| Lori K. | $119,500 | $7,254 | $1,696.50 | $717 | $378 |
| Kitty O. | $36,900 | $2,287.80 | $535.05 | $221.40 | $378 |
| John W. | $4,000 | $248 | $58 | $24 | $216 |
| $684,000 | $40,424 | $9,454 | $4,104 | $3,186 |
2.
| Payroll Taxes | Employee | Employer | Total Tax |
| FICA Social Security | $40,424 | 71% | |
| FICA Medicare | $9,454 | 16.5% | |
| FUTA | $4,104 | 7% | |
| SUTA | $3,186 | 5.5% |
Explanation of Solution
Explanation:
1. FICA Social Security
| Employee | Subject to Tax | Tax Rate | Amount |
| Ken S. | $6,000 | 6.2% | $372 |
| Tim. V | $60,200 | 6.2% | $3732.40 |
| Steve S. | $87,000 | 6.2% | $5,394 |
| Ann T. | $117,000 | 6.2% | $7,254 |
| Kathleen K. | $106,900 | 6.2% | $6,627.80 |
| Michelle H. | $117,000 | 6.2% | $7,254 |
| Lori K. | $117,000 | 6.2% | $7,254 |
| Kitty O. | $36,900 | 6.2% | $2,287.80 |
| John W. | $4,000 | 6.2% | $248 |
| $40,424 |
FICA Medicare
| Employee | Subject to Tax | Tax Rate | Amount |
| Ken S. | $6,000 | 1.45% | $87 |
| Tim. V | $60,200 | 1.45% | $872.90 |
| Steve S. | $87,000 | 1.45% | $1,261.50 |
| Ann T. | $117,000 | 1.45% | $1,696.50 |
| Kathleen K. | $106,900 | 1.45% | $1,550.05 |
| Michelle H. | $117,000 | 1.45% | $1,696.50 |
| Lori K. | $117,000 | 1.45% | $1,696.50 |
| Kitty O. | $36,900 | 1.45% | $535.05 |
| John W. | $4,000 | 1.45% | $58 |
| $9,454 |
FUTA Taxes
| Employee | Subject to Tax | Tax Rate | Amount |
| Ken S. | $6,000 | 0.6% | $36 |
| Tim. V | $60,200 | 0.6% | $361.20 |
| Steve S. | $87,000 | 0.6% | $522 |
| Ann T. | $146,500 | 0.6% | $879 |
| Kathleen K. | $106,900 | 0.6% | $641.40 |
| Michelle H. | $117,000 | 0.6% | $702 |
| Lori K. | $119,500 | 0.6% | $717 |
| Kitty O. | $36,900 | 0.6% | $221.40 |
| John W. | $4,000 | 0.6% | $24 |
| $4,104 |
SUTA Taxes
| Employee | Subject to Tax | Tax Rate | Amount |
| Ken S. | $6,000 | 5.4% | $324 |
| Tim. V | $7,000 | 5.4% | $378 |
| Steve S. | $7,000 | 5.4% | $378 |
| Ann T. | $7,000 | 5.4% | $378 |
| Kathleen K. | $7,000 | 5.4% | $378 |
| Michelle H. | $7,000 | 5.4% | $378 |
| Lori K. | $7,000 | 5.4% | $378 |
| Kitty O. | $7,000 | 5.4% | $378 |
| John W. | $4,000 | 5.4% | $216 |
| $3,186 |
2.
| Payroll Taxes | Amount | Percent |
| FICA Social Security | $40,424 | 71% |
| FICA Medicare | $9,454 | 16.5% |
| FUTA | $4,104 | 7% |
| SUTA | $3,186 | 5.5% |
| Total | $57,168 | 100% |
Conclusion
Conclusion:
The payroll tax to be paid by employee is $49,878 and employer is $7,290.
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