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 Current Week Income Tax Name Dali Trey Kiesha Chee Gross Pay through Aug. 18 $115,650 116,300 Gross Pay Withholding $3,300 2,200 580 530 469 354 50 40 8,400 2,350 In addition to gross pay, the company must pay one-half of the $86 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

Answer 1

1) Employees' FICA Withholdings for Social Security
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	2850	6.20%	176.70
Trey	2200	6.20%	136.40
Kiesha	580	6.20%	35.96
Chee	530	6.20%	32.86
		Total	381.92
2) Employees' FICA Withholdings for Medicare
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	3300	1.45%	47.85
Trey	2200	1.45%	31.90
Kiesha	580	1.45%	8.41
Chee	530	1.45%	7.69
		Total	95.85
3) Employer's FICA Taxes for Social Security
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	2850	6.20%	176.70
Trey	2200	6.20%	136.40
Kiesha	580	6.20%	35.96
Chee	530	6.20%	32.86
		Total	381.92
4) Employer's FICA Taxes for Medicare
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	3300	1.45%	47.85
Trey	2200	1.45%	31.90
Kiesha	580	1.45%	8.41
Chee	530	1.45%	7.69
		Total	95.85
5) Employer's FUTA Taxes
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali		0.60%
Trey		0.60%
Kiesha		0.60%
Chee	530	0.60%	3.18
		Total	3.18
6) Employer's SUTA Taxes
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali		2.15%
Trey		2.15%
Kiesha		2.15%
Chee	530	2.15%	11.40
		Total	11.40
7) Each Employee's Net (take-home) Pay
Employee	Dali	Trey	Kiesha	Chee	Total
Gross Pay	3300.00	2200.00	580.00	530.00	6610.00
Income tax withholding	469.00	354.00	50.00	40.00	913.00
FICA - Social Security	176.70	136.40	35.96	32.86	381.92
FICA - Medicare	47.85	31.90	8.41	7.69	95.85
Health Insurance	43.00	43.00	43.00	43.00	172.00
Net Pay	2563.45	1634.70	442.63	406.45	5047.23
8) Total Payroll Related Expense for Each Employee
Employee	Dali	Trey	Kiesha	Chee	Total
Gross Pay	3300.00	2200.00	580.00	530.00	6610.00
FICA - Social Security	176.70	136.40	35.96	32.86	381.92
FICA - Medicare	47.85	31.90	8.41	7.69	95.85
FUTA	0.00	0.00	0.00	3.18	3.18
SUTA	0.00	0.00	0.00	11.40	11.40
Health Insurance	43.00	43.00	43.00	43.00	172.00
Pension	264.00	176.00	46.40	42.40	528.80
Total Payroll Expense	3831.55	2587.30	713.77	670.53	7803.15