Question

Zippy, LLC has one employee who has worked January - June of the current year. The employee is single, paid weekly, and claims three allowances on her W-2. The company is in a state that has no state income taxes. The FICA Social Security tax rate is 6.2% on the first $118.500 of wages and the FICA Medicare tax rate is 1.45% on all wages. Zippy, LLCS FUTA tax rate is 0.6% on the first $7,000 of wages and their SUTA tax rate is 2.3% on the first $8,000 of wages. The employee's earnings thus far are as follows: Gross pay Jan - May Gross pay for June $7,800 $1,400 should be withheld from the employees paycheck and her net pay for June. a) Use the information above and the IRS tax table (click to pop open) to calculate Round values to 2 decimal places if needed. Gross Pay Federal Withholding FICA-SS FICA-Medicare Net Pay b) Prepare the journal entry Zippy, LLC will record to accrue the June wages for this employee

Answer 1

Gross Pay $1,400 Federal Withholding 134 FICA-SS (1300*6.2%) $80.60 FICA-Medicare (1300*1.45%) $18.85 Net pay..

Gross Pay Jan- May	Gross Pay for June	Gross Pay through June
7800	1400	(7800 + 1400) = $ 9200

Calculation of Taxes	Calculations	Amount
Federal withholding		114
FICA Social Security	1400 * 6.2%	86.80
FICA Medicare	1400*1.45%	20.30
FUTA		0
SUTA	200*2.3%	4.60

Calculation of taxable amount for SUTA

Gross Pay through June	9200
Unemployment Limit	8000
Exempt amount	1200
Current Earnings	1400
Exempt amount	1200
Taxable Amount	200

a.

Gross Pay	1400
Federal withholding	114
FICA SS	86.8
FICA Medicare	20.3
Net pay	1178.9

b.

Account	Debit	Credit
Wage expense	1400
Federal withholding		114
FICA SS		86.8
FICA Medicare		20.3
Net wages payable		1178.9

c.

FICA SS	86.8
FICA Medicare	20.3
FUTA	0
SUTA	4.6
Total ER taxes	111.7

d.

Account	Debit	Credit
Payroll tax expense	111.7
FICA SS		86.8
FICA Medicare		20.3
SUTA		4.6