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Business Accounting FINANCIAL ACCT-CONNECT

a. Employer Payroll tax expense: Apart from Gross salaries which are being offered to the employees, the employers are also required to contribute towards the taxes to the Federal and state. The FICA social security tax and Medicare tax need to be equally contributed by the employer upto the threshold limit. Apart from these taxes, the unemployment tax both for Federal and State need to be contributed by the employer till the salaries of each particular employee does not reach the threshold limit. Employee tax withheld: While paying the gross salaries, the FICA Social security tax and FICA Medicare tax as contributed by employer is also deducted from the gross salaries of employees. Also, the deduction in respect of Federal Income tax if applicable on employee is also deducted from its gross salaries to arrive at the net salaries so paid to the employees. All these deductions of taxes made and own contribution of taxes by the employer is made payable by the employer. To determine: The amounts to be computed in the table given. The table has been prepared as under: Employee Cumulative pay Pay subject to FICA Social security Pay subject to FICA Medicare Pay subject to FUTA taxes Pay subject to SUTA taxes K. S. 6,000 6,000 6,000 6,000 6,000 T. V. 42,800 42,800 42,800 7,000 7,000 S. S. 87,000 87,000 87,000 7,000 7,000 M. W. 143,500 143,500 143,500 7,000 7,000 M. M. 106,900 106,900 106,900 7,000 7,000 Z. R. 127,200 127,200 127,200 7,000 7,000 L. K. 129,700 127,200 127,200 7,000 7,000 K. O. 36,900 36,900 36,900 7,000 7,000 J. W. 4,000 4,000 4,000 4,000 4,000 The explanations of the computation of above amounts are as under: The pay which is subject to FICA Social security tax is $127,200. Thus, the employee whose total cumulative gross salaries are below $127,200 is subject to FICA social security taxes on the whole of cumulative their gross salaries. And the employee whose gross cumulative salary is above $127,200 is subject to FICA social security tax on $127,200 only. The pay which is subject to FICA Medicare tax is $127,200. Thus, the employee whose total cumulative gross salaries are below $127,200 is subject to FICA Medicare tax on the whole of cumulative their gross salaries. And the employee whose gross cumulative salary is above $127,200 is subject to FICA Medicare tax on $127,200 only. The pay which is subject to Federal unemployment tax is $7,000. Thus, the employer would pay FUTA on the salaries up to $7,000 only. Thus, the employees whose total cumulative gross salaries are below $7,000 is subject to FUTA tax on the whole of cumulative gross salaries. And the employee whose gross cumulative salary is above $7,000 is subject to FUTA up to $7,000 only. The pay which is subject to State unemployment tax is $7,000. Thus, the employer would pay SUTA on the salaries up to $7,000 only. Thus, the employees whose total cumulative gross salaries are below $7,000 is subject to SUTA tax on the whole of cumulative gross salaries. And the employee whose gross cumulative salary is above $7,000 is subject to SUTA up to $7,000 only. b. Employer Payroll tax expense: Apart from Gross salaries which are being offered to the employees, the employers are also required to contribute towards the taxes to the Federal and state. The FICA social security tax and Medicare tax need to be equally contributed by the employer upto the threshold limit. Apart from these taxes, the unemployment tax both for Federal and State need to be contributed by the employer till the salaries of each particular employee does not reach the threshold limit. Employee tax withheld: While paying the gross salaries, the FICA Social security tax and FICA Medicare tax as contributed by employer is also deducted from the gross salaries of employees. Also, the deduction in respect of Federal Income tax if applicable on employee is also deducted from its gross salaries to arrive at the net salaries so paid to the employees. All these deductions of taxes made and own contribution of taxes by the employer is made payable by the employer. To complete: The amounts to be computed in the table given. The table has been prepared as under: Employee Cumulative pay FICA Social security FICA Medicare FUTA taxes SUTA taxes K. S. 6,000 372 87 36 324 T. V. 42,800 2653.6 620.6 42 378 S. S. 87,000 5394 1261.5 42 378 M. W. 143,500 8897 2080.75 42 378 M. M. 106,900 6627.8 1550.05 42 378 Z. R. 127,200 7886.4 1844.4 42 378 L. K. 129,700 8041.4 1880.65 42 378 K. O. 36,900 2287.8 535.05 42 378 J. W. 4,000 248 58 24 216 The explanations of the computation of above amounts are as under: 1. The pay which is subject to FICA Social security tax is $127,200. Thus, the employee whose total cumulative gross salaries are below $127,200 is subject to FICA social security tax on the whole of cumulative gross salaries. Employee Cumulative pay Tax rate Pay subject to FICA Social Security K. S. 6,000 6.20% 372 T. V. 42,800 6.20% 2653.6 S. S. 87,000 6.20% 5394 M. W. 143,500 6.20% 8897 M. M. 106,900 6.20% 6627.8 Z. R. 127,200 6.20% 7886.4 L. K. 129,700 6.20% 8041.4 K. O. 36,900 6.20% 2287.8 J. W. 4,000 6.20% 248 2. The pay with subject to FICA Medicare can be computed by computing 1.45% of gross pay of each employee. It has been computed below: Employee Cumulative pay Tax rate Pay subject to FICA Medicare K. S. 6,000 1.45% 87 T. V. 42,800 1.45% 620.6 S. S. 87,000 1.45% 1261.5 M. W. 143,500 1.45% 2080.75 M. M. 106,900 1.45% 1550.05 Z. R. 127,200 1.45% 1844.4 L. K. 129,700 1.45% 1880.65 K. O. 36,900 1.45% 535.05 J. W. 4,000 1.45% 58 3. The pay which is subject to Federal unemployment tax is $7,000. Thus, the employer would pay FUTA on the salaries up to $7,000 only. Thus, the employees whose total cumulative gross salaries are below $7,000 is subject to FUTA tax of 0.6%. It has been computed below: Employee Cumulative pay Tax rate Pay subject to FUTA K. S. 6,000 0.60% 36 T. V. 7,000 0.60% 42 S. S. 7,000 0.60% 42 M. W. 7,000 0.60% 42 M. M. 7,000 0.60% 42 Z. R. 7,000 0.60% 42 L. K. 7,000 0.60% 42 K. O. 7,000 0.60% 42 J. W. 4,000 0.60% 24 4. The pay which is subject to State unemployment tax is $7,000. Thus, the employer would pay SUTA on the salaries up to $7,000 only. Thus, the employees whose total cumulative gross salaries are below $7,000 is subject to SUTA tax of 5.4%. It has been computed below: Employee Cumulative pay Tax rate Pay subject to SUTA K. S. 6,000 5.40% 324 T. V. 7,000 5.40% 378 S. S. 7,000 5.40% 378 M. W. 7,000 5.40% 378 M. M. 7,000 5.40% 378 Z. R. 7,000 5.40% 378 L. K. 7,000 5.40% 378 K. O. 7,000 5.40% 378 J. W. 4,000 5.40% 216

a. Employer Payroll tax expense: Apart from Gross salaries which are being offered to the employees, the employers are also required to contribute towards the taxes to the Federal and state. The FICA social security tax and Medicare tax need to be equally contributed by the employer upto the threshold limit. Apart from these taxes, the unemployment tax both for Federal and State need to be contributed by the employer till the salaries of each particular employee does not reach the threshold limit. Employee tax withheld: While paying the gross salaries, the FICA Social security tax and FICA Medicare tax as contributed by employer is also deducted from the gross salaries of employees. Also, the deduction in respect of Federal Income tax if applicable on employee is also deducted from its gross salaries to arrive at the net salaries so paid to the employees. All these deductions of taxes made and own contribution of taxes by the employer is made payable by the employer. To determine: The amounts to be computed in the table given. The table has been prepared as under: Employee Cumulative pay Pay subject to FICA Social security Pay subject to FICA Medicare Pay subject to FUTA taxes Pay subject to SUTA taxes K. S. 6,000 6,000 6,000 6,000 6,000 T. V. 42,800 42,800 42,800 7,000 7,000 S. S. 87,000 87,000 87,000 7,000 7,000 M. W. 143,500 143,500 143,500 7,000 7,000 M. M. 106,900 106,900 106,900 7,000 7,000 Z. R. 127,200 127,200 127,200 7,000 7,000 L. K. 129,700 127,200 127,200 7,000 7,000 K. O. 36,900 36,900 36,900 7,000 7,000 J. W. 4,000 4,000 4,000 4,000 4,000 The explanations of the computation of above amounts are as under: The pay which is subject to FICA Social security tax is $127,200. Thus, the employee whose total cumulative gross salaries are below $127,200 is subject to FICA social security taxes on the whole of cumulative their gross salaries. And the employee whose gross cumulative salary is above $127,200 is subject to FICA social security tax on $127,200 only. The pay which is subject to FICA Medicare tax is $127,200. Thus, the employee whose total cumulative gross salaries are below $127,200 is subject to FICA Medicare tax on the whole of cumulative their gross salaries. And the employee whose gross cumulative salary is above $127,200 is subject to FICA Medicare tax on $127,200 only. The pay which is subject to Federal unemployment tax is $7,000. Thus, the employer would pay FUTA on the salaries up to $7,000 only. Thus, the employees whose total cumulative gross salaries are below $7,000 is subject to FUTA tax on the whole of cumulative gross salaries. And the employee whose gross cumulative salary is above $7,000 is subject to FUTA up to $7,000 only. The pay which is subject to State unemployment tax is $7,000. Thus, the employer would pay SUTA on the salaries up to $7,000 only. Thus, the employees whose total cumulative gross salaries are below $7,000 is subject to SUTA tax on the whole of cumulative gross salaries. And the employee whose gross cumulative salary is above $7,000 is subject to SUTA up to $7,000 only. b. Employer Payroll tax expense: Apart from Gross salaries which are being offered to the employees, the employers are also required to contribute towards the taxes to the Federal and state. The FICA social security tax and Medicare tax need to be equally contributed by the employer upto the threshold limit. Apart from these taxes, the unemployment tax both for Federal and State need to be contributed by the employer till the salaries of each particular employee does not reach the threshold limit. Employee tax withheld: While paying the gross salaries, the FICA Social security tax and FICA Medicare tax as contributed by employer is also deducted from the gross salaries of employees. Also, the deduction in respect of Federal Income tax if applicable on employee is also deducted from its gross salaries to arrive at the net salaries so paid to the employees. All these deductions of taxes made and own contribution of taxes by the employer is made payable by the employer. To complete: The amounts to be computed in the table given. The table has been prepared as under: Employee Cumulative pay FICA Social security FICA Medicare FUTA taxes SUTA taxes K. S. 6,000 372 87 36 324 T. V. 42,800 2653.6 620.6 42 378 S. S. 87,000 5394 1261.5 42 378 M. W. 143,500 8897 2080.75 42 378 M. M. 106,900 6627.8 1550.05 42 378 Z. R. 127,200 7886.4 1844.4 42 378 L. K. 129,700 8041.4 1880.65 42 378 K. O. 36,900 2287.8 535.05 42 378 J. W. 4,000 248 58 24 216 The explanations of the computation of above amounts are as under: 1. The pay which is subject to FICA Social security tax is $127,200. Thus, the employee whose total cumulative gross salaries are below $127,200 is subject to FICA social security tax on the whole of cumulative gross salaries. Employee Cumulative pay Tax rate Pay subject to FICA Social Security K. S. 6,000 6.20% 372 T. V. 42,800 6.20% 2653.6 S. S. 87,000 6.20% 5394 M. W. 143,500 6.20% 8897 M. M. 106,900 6.20% 6627.8 Z. R. 127,200 6.20% 7886.4 L. K. 129,700 6.20% 8041.4 K. O. 36,900 6.20% 2287.8 J. W. 4,000 6.20% 248 2. The pay with subject to FICA Medicare can be computed by computing 1.45% of gross pay of each employee. It has been computed below: Employee Cumulative pay Tax rate Pay subject to FICA Medicare K. S. 6,000 1.45% 87 T. V. 42,800 1.45% 620.6 S. S. 87,000 1.45% 1261.5 M. W. 143,500 1.45% 2080.75 M. M. 106,900 1.45% 1550.05 Z. R. 127,200 1.45% 1844.4 L. K. 129,700 1.45% 1880.65 K. O. 36,900 1.45% 535.05 J. W. 4,000 1.45% 58 3. The pay which is subject to Federal unemployment tax is $7,000. Thus, the employer would pay FUTA on the salaries up to $7,000 only. Thus, the employees whose total cumulative gross salaries are below $7,000 is subject to FUTA tax of 0.6%. It has been computed below: Employee Cumulative pay Tax rate Pay subject to FUTA K. S. 6,000 0.60% 36 T. V. 7,000 0.60% 42 S. S. 7,000 0.60% 42 M. W. 7,000 0.60% 42 M. M. 7,000 0.60% 42 Z. R. 7,000 0.60% 42 L. K. 7,000 0.60% 42 K. O. 7,000 0.60% 42 J. W. 4,000 0.60% 24 4. The pay which is subject to State unemployment tax is $7,000. Thus, the employer would pay SUTA on the salaries up to $7,000 only. Thus, the employees whose total cumulative gross salaries are below $7,000 is subject to SUTA tax of 5.4%. It has been computed below: Employee Cumulative pay Tax rate Pay subject to SUTA K. S. 6,000 5.40% 324 T. V. 7,000 5.40% 378 S. S. 7,000 5.40% 378 M. W. 7,000 5.40% 378 M. M. 7,000 5.40% 378 Z. R. 7,000 5.40% 378 L. K. 7,000 5.40% 378 K. O. 7,000 5.40% 378 J. W. 4,000 5.40% 216

Solution Summary: The author explains how the employer contributes to the federal and state taxes, such as Social Security, Medicare, and unemployment taxes.

FINANCIAL ACCT-CONNECT

FINANCIAL ACCT-CONNECT

8th Edition

ISBN: 9781266627903

Author: Wild

Publisher: INTER MCG

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