Question

Problem 11-3A Payroll expenses, withholdings, and taxes LO P2, P3

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.

Name Dali Trey Kiesha Chee Gross Pay through Aug. 18 $115, 600 116, 150 8, 100 2,050 Current Week Income Tax Gross Pay Withholding $3,000 $ 426 2, 350 379 550 500 38

In addition to gross pay, the company must pay one-half of the $80 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	2900	6.20%	179.80
Trey	2350	6.20%	145.70
Kiesha	550	6.20%	34.10
Chee	500	6.20%	31.00
		Total	390.60
2) Employees' FICA Withholdings for Medicare
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	3000	1.45%	43.50
Trey	2350	1.45%	34.08
Kiesha	550	1.45%	7.98
Chee	500	1.45%	7.25
		Total	92.81
3) Employer's FICA Taxes for Social Security
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	2900	6.20%	179.80
Trey	2350	6.20%	145.70
Kiesha	550	6.20%	34.10
Chee	500	6.20%	31.00
		Total	390.60
4) Employer's FICA Taxes for Medicare
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	3000	1.45%	43.50
Trey	2350	1.45%	34.08
Kiesha	550	1.45%	7.98
Chee	500	1.45%	7.25
		Total	92.81
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	500	0.60%	3.00
		Total	3.00
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	500	2.15%	10.75
		Total	10.75
7) Each Employee's Net (take-home) Pay
Employee	Dali	Trey	Kiesha	Chee	Total
Gross Pay	3000.00	2350.00	550.00	500.00	6400.00
Income tax withholding	426.00	379.00	48.00	38.00	891.00
FICA - Social Security	179.80	145.70	34.10	31.00	390.60
FICA - Medicare	43.50	34.08	7.98	7.25	92.81
Health Insurance	40.00	40.00	40.00	40.00	160.00
Net Pay	2310.70	1751.22	419.92	383.75	4865.59
8) Total Payroll Related Expense for Each Employee
Employee	Dali	Trey	Kiesha	Chee	Total
Gross Pay	3000.00	2350.00	550.00	500.00	6400.00
FICA - Social Security	179.80	145.70	34.10	31.00	390.60
FICA - Medicare	43.50	34.08	7.98	7.25	92.81
FUTA	0.00	0.00	0.00	3.00	3.00
SUTA	0.00	0.00	0.00	10.75	10.75
Health Insurance	40.00	40.00	40.00	40.00	160.00
Pension	240.00	188.00	44.00	40.00	512.00
Total Payroll Expense	3503.30	2757.78	676.08	632.00	7569.16