(a) Concept Introduction: Payroll means that amount of money that employer pays to the employees against the services provided by the employees to the employers. The payroll includes salaries of the employees. Payroll tax is the amount of tax levied on the payroll paid. As per FICA (Federal Insurance Contribution Act), from the payment of payroll by the employers to employees, employers have to withhold a percentile part from that payment. To calculate: The amount for the employer payroll taxes.

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Diana and Ryan Workman were married on January 1 of last year. Ryan has an eight-year-old son, Jorge, from his previous marriage. Diana works as a computer programmer at Datafile Incorporated (DI) earning a base salary of $98,000. Ryan is self-employed and runs a day care center. The Workmans reported the following financial information pertaining to their activities during the current year. a. Diana earned a $98,000 base salary for the year (not including any taxable benefits). b. Diana borrowed $12,400 from DI to purchase a car. DI charged her 2 percent interest ($248) on the loan, which Diana paid on December 31. DI would have charged Diana $760 if interest had been calculated at the applicable federal interest rate. Assume that tax avoidance was not a motive for the loan. c. Ryan received $2,200 in alimony and $4,900 in child support payments from his former spouse. They divorced in 2016. d. Ryan won a $940 cash prize at his church-sponsored Bingo game. e. The Workmans received…

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Chapter 8, Problem 8.7E

To determine

(a)

Concept Introduction:

Payroll means that amount of money that employer pays to the employees against the services provided by the employees to the employers. The payroll includes salaries of the employees.

Payroll tax is the amount of tax levied on the payroll paid. As per FICA (Federal Insurance Contribution Act), from the payment of payroll by the employers to employees, employers have to withhold a percentile part from that payment.

To calculate:

The amount for the employer payroll taxes.

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Diana and Ryan Workman were married on January 1 of last year. Ryan has an eight-year-old son, Jorge, from his previous marriage. Diana works as a computer programmer at Datafile Incorporated (DI) earning a base salary of $98,000. Ryan is self-employed and runs a day care center. The Workmans reported the following financial information pertaining to their activities during the current year. a. Diana earned a $98,000 base salary for the year (not including any taxable benefits). b. Diana borrowed $12,400 from DI to purchase a car. DI charged her 2 percent interest ($248) on the loan, which Diana paid on December 31. DI would have charged Diana $760 if interest had been calculated at the applicable federal interest rate. Assume that tax avoidance was not a motive for the loan. c. Ryan received $2,200 in alimony and $4,900 in child support payments from his former spouse. They divorced in 2016. d. Ryan won a $940 cash prize at his church-sponsored Bingo game. e. The Workmans received…

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ABC Company produces a single product. Operating data for the company and its absorption costing income statement for the last year are presented below: Particulars Units in beginning inventory Units produced Amount 0 9,000 Units sold 7,000 Sales 1,00,000 Less: Cost of goods sold: Beginning inventory Add: Cost of goods manufactured 54,000 Goods available for sale 54,000 Less: Ending inventory 12,000 Cost of goods sold 42,000 Gross margin 58,000 Less: Selling and administrative expenses 28,000 Net operating income 30,000 Variable manufacturing costs are $4 per unit. Fixed manufacturing overhead totals $18,000 for the year. The fixed manufacturing overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold Required: Prepare a new income statement for the year using variable costing.