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 $ 115,700 $ 3,400 $ 483 Trey 116,350 2,150 346 Kiesha 8,500 590 51 Chee 2,450 540 41 In addition to gross pay, the company must pay one-half of the $88 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	2800	6.20%	173.60
Trey	2150	6.20%	133.30
Kiesha	590	6.20%	36.58
Chee	540	6.20%	33.48
		Total	376.96
2) Employees' FICA Withholdings for Medicare
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	3400	1.45%	49.30
Trey	2150	1.45%	31.18
Kiesha	590	1.45%	8.56
Chee	540	1.45%	7.83
		Total	96.87
3) Employer's FICA Taxes for Social Security
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	2800	6.20%	173.60
Trey	2150	6.20%	133.30
Kiesha	590	6.20%	36.58
Chee	540	6.20%	33.48
		Total	376.96
4) Employer's FICA Taxes for Medicare
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	3400	1.45%	49.30
Trey	2150	1.45%	31.18
Kiesha	590	1.45%	8.56
Chee	540	1.45%	7.83
		Total	96.87
5) Employer's FUTA Taxes
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	0	0.60%
Trey	0	0.60%
Kiesha	0	0.60%
Chee	540	0.60%	3.24
		Total	3.24
6) Employer's SUTA Taxes
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	0	2.15%
Trey	0	2.15%
Kiesha	0	2.15%
Chee	540	2.15%	11.61
		Total	11.61
7) Each Employee's Net (take-home) Pay
Employee	Dali	Trey	Kiesha	Chee	Total
Gross Pay	3400.00	2150.00	590.00	540.00	6680.00
Income tax withholding	483.00	346.00	51.00	41.00	921.00
FICA - Social Security	173.60	133.30	36.58	33.48	376.96
FICA - Medicare	49.30	31.18	8.56	7.83	96.87
Health Insurance	44.00	44.00	44.00	44.00	176.00
Net Pay	2650.10	1595.52	449.86	413.69	5109.17
8) Total Payroll Related Expense for Each Employee
Employee	Dali	Trey	Kiesha	Chee	Total
Gross Pay	3400.00	2150.00	590.00	540.00	6680.00
FICA - Social Security	173.60	133.30	36.58	33.48	376.96
FICA - Medicare	49.30	31.18	8.56	7.83	96.87
FUTA	0.00	0.00	0.00	3.24	3.24
SUTA	0.00	0.00	0.00	11.61	11.61
Health Insurance	44.00	44.00	44.00	44.00	176.00
Pension	272.00	172.00	47.20	43.20	534.40
Total Payroll Expense	3938.90	2530.48	726.34	683.36	7879.08