Skip to main content

Business Accounting Financial Accounting: Information for Decisions

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 Accounting: Information for Decisions

Financial Accounting: Information for Decisions

9th Edition

ISBN: 9781260158809

Author: Wild, John

Publisher: MCGRAW-HILL HIGHER EDUCATION

See similar textbooks

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

Blurred answer

Chapter 9, Problem 8E

Chapter 9, Problem 10E

Students have asked these similar questions

none

I am searching for the accurate solution to this general accounting problem with the right approach.

Hello teacher please solve this questions

Chapter 9 Solutions

Financial Accounting: Information for Decisions

Ch. 9 - Prob. 1DQ Ch. 9 - Prob. 2DQ Ch. 9 - Prob. 3DQ Ch. 9 - What is the combined amount (in percent) of the...Ch. 9 - What is the current Medicare tax rate? This rate...Ch. 9 - Prob. 6DQ Ch. 9 - Prob. 7DQ Ch. 9 - Prob. 8DQ Ch. 9 - Why are warranty liabilities usually recognized on...Ch. 9 - Prob. 10DQ

Ch. 9 - Prob. 11DQ Ch. 9 - Prob. 12DQ Ch. 9 - Prob. 13DQ Ch. 9 - Prob. 14DQ Ch. 9 - Prob. 15DQ Ch. 9 - Prob. 16DQ Ch. 9 - Prob. 1QS Ch. 9 - Prob. 2QS Ch. 9 - Ticketsales, Inc., receives $5,000,000 cash in...Ch. 9 - Prob. 4QS Ch. 9 - Prob. 5QS Ch. 9 - Prob. 6QS Ch. 9 - Prob. 7QS Ch. 9 - Prob. 8QS Ch. 9 - Prob. 9QS Ch. 9 - Prob. 10QS Ch. 9 - Prob. 11QS Ch. 9 - Prob. 12QS Ch. 9 - Sera Corporation has made and recorded its...Ch. 9 - Prob. 15QS Ch. 9 - Prob. 1E Ch. 9 - Prepare any necessary entries at December 31 for...Ch. 9 - Prob. 3E Ch. 9 - Prob. 4E Ch. 9 - Prob. 5E Ch. 9 - Prob. 6E Ch. 9 - Prob. 7E Ch. 9 - Prob. 8E Ch. 9 - Prob. 9E Ch. 9 - Hitzu Co. sold a copier costing $4,800 with a...Ch. 9 - Prob. 11E Ch. 9 - Prob. 12E Ch. 9 - Prob. 13E Ch. 9 - Prob. 14E Ch. 9 - Prob. 15E Ch. 9 - Prob. 16E Ch. 9 - Prob. 18E Ch. 9 - Prob. 19E Ch. 9 - Prob. 1PSA Ch. 9 - Prob. 2PSA Ch. 9 - Paloma Co. has four employees. FICA Social...Ch. 9 - Prob. 4PSA Ch. 9 - Shown here are condensed income statements for two...Ch. 9 - Prob. 6PSA Ch. 9 - Warner Co. entered into the following transaction...Ch. 9 - Prob. 2PSB Ch. 9 - Fishing Guides Co. has four employees. FICA Social...Ch. 9 - On November10, 2017, Lee Co. began operations by...Ch. 9 - Shown here are condensed income statements for two...Ch. 9 - Prob. 6PSB Ch. 9 - Prob. 9SP Ch. 9 - Prob. 1GLP Ch. 9 - Prob. 1FSA Ch. 9 - Prob. 2FSA Ch. 9 - Prob. 3FSA Ch. 9 - Prob. 1BTN Ch. 9 - Prob. 2BTN Ch. 9 - Assume that your team is in business and you must...Ch. 9 - Prob. 5BTN

Knowledge Booster

Background pattern image

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning

Text book image

Excel Applications for Accounting Principles

Accounting

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Cengage Learning

SEE MORE TEXTBOOKS