Question

Paloma Co. has four employees. FICA Social Security taxes are 6.2% of the first $118,500 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. Also, for the first $7,000 paid to each employee, the company’s FUTA taxes are 0.6% and SUTA taxes are 2.15%. The company is preparing its payroll calculations for the week ended August 25. Payroll records show the following information for the company’s four employees. Current Week Name Gross Pay through Aug. 18 Gross Pay Income Tax Withholding Dali $ 115,850 $ 3,700 $ 525 Trey 116,500 2,000 322 Kiesha 8,800 620 54 Chee 2,750 570 43 In addition to gross pay, the company must pay one-half of the $94 per employee weekly health insurance; each employee pays the remaining one-half. The company also contributes an extra 8% of each employee’s gross pay (at no cost to employees) to a pension fund. Required: Compute the following for the week ended August 25. (Round your intermediate calculations and final answers to 2 decimal places.):

Answer 1

1) Employees' FICA Withholdings for Social Security
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	2650	6.20%	164.30
Trey	2000	6.20%	124.00
Kiesha	620	6.20%	38.44
Chee	570	6.20%	35.34
		Total	362.08
2) Employees' FICA Withholdings for Medicare
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	3700	1.45%	53.65
Trey	2000	1.45%	29.00
Kiesha	620	1.45%	8.99
Chee	570	1.45%	8.27
		Total	99.91
3) Employer's FICA Taxes for Social Security
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	2650	6.20%	164.30
Trey	2000	6.20%	124.00
Kiesha	620	6.20%	38.44
Chee	570	6.20%	35.34
		Total	362.08
4) Employer's FICA Taxes for Medicare
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	3700	1.45%	53.65
Trey	2000	1.45%	29.00
Kiesha	620	1.45%	8.99
Chee	570	1.45%	8.27
		Total	99.91
5) Employer's FUTA Taxes
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali		0.60%
Trey		0.60%
Kiesha		0.60%
Chee	570	0.60%	3.42
		Total	3.42
6) Employer's SUTA Taxes
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali		2.15%
Trey		2.15%
Kiesha		2.15%
Chee	570	2.15%	12.26
		Total	12.26
7) Each Employee's Net (take-home) Pay
Employee	Dali	Trey	Kiesha	Chee	Total
Gross Pay	3700.00	2000.00	620.00	570.00	6890.00
Income tax withholding	525.00	322.00	54.00	43.00	944.00
FICA - Social Security	164.30	124.00	38.44	35.34	362.08
FICA - Medicare	53.65	29.00	8.99	8.27	99.91
Health Insurance	47.00	47.00	47.00	47.00	188.00
Net Pay	2910.05	1478.00	471.57	436.39	5296.01
8) Total Payroll Related Expense for Each Employee
Employee	Dali	Trey	Kiesha	Chee	Total
Gross Pay	3700.00	2000.00	620.00	570.00	6890.00
FICA - Social Security	164.30	124.00	38.44	35.34	362.08
FICA - Medicare	53.65	29.00	8.99	8.27	99.91
FUTA	0.00	0.00	0.00	3.42	3.42
SUTA	0.00	0.00	0.00	12.26	12.26
Health Insurance	47.00	47.00	47.00	47.00	188.00
Pension	296.00	160.00	49.60	45.60	551.20
Total Payroll Expense	4260.95	2360.00	764.03	721.89	8106.87