Chapter 9, Problem 5E

Exercise 9-5 Computing payroll taxes P2 P3

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $118,500 paid to its employee, and FICA Medicare taxes are 1.4% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid to its employee. Compute BMX’s amounts for each of these four taxes as applied to the employee’s gross earnings for September under each of three separate situations (a),(b), and (c). (Round amounts to cents.)

	Gross Pay through August	Gross Pay for September
a.	$ 6,400	$ 800
b.	18,200	2,100
c.	112,200	8,000

Check (a) FUTA, $3.60; SUTA, $17.40