Question

Example 3-1

In 20--, the annual salaries paid each of the officers of Abrew, Inc., follow. The officers are paid semimonthly on the 15th and the last day of the month. Compute the FICA taxes to be withheld from each officer's pay on (a) November 15 and (b) December 31.

Round your answers to the nearest cent. If an amount is zero, enter "0".

a.

		November 15
Name and Title	Annual Salary	OASDI Taxable Earnings	OASDI Tax	HI Taxable Earnings	HI Tax
Hanks, Timothy, President	$156,000	$	$	$	$
Grath, John, VP Finance	138,000
James, Sally, VP Sales	69,600
Kimmel, Joan, VP Mfg.	54,000
Wie, Pam, VP Personnel	51,600
Grant, Mary, VP Secretary	49,200

b.

		December 31
Name and Title	Annual Salary	OASDI Taxable Earnings	OASDI Tax	HI Taxable Earnings	HI Tax
Hanks, Timothy, President	$156,000	$	$	$	$
Grath, John, VP Finance	138,000
James, Sally, VP Sales	69,600
Kimmel, Joan, VP Mfg.	54,000
Wie, Pam, VP Personnel	51,600
Grant, Mary, VP Secretary	49,200

Answer 1

a
		November 15
Name and Title	Annual	OASDI Taxable	OASDI Tax	HI Taxable	HI Tax
	Salary	Earnings		Earnings
Hanks, Timothy, President	156000	2900	179.80	6500	94.25
Grath, John, VP Finance	138000	5750	356.50	5750	83.38
James, Sally, VP Sales	69600	2900	179.80	2900	42.05
Kimmel, Joan, VP Mfg.	54000	2250	139.50	2250	32.63
Wie, Pam, VP Personnel	51600	2150	133.30	2150	31.18
Grant, Mary, VP Secretary	49200	2050	127.10	2050	29.73
b
		December 31
Name and Title	Annual	OASDI Taxable	OASDI Tax	HI Taxable	HI Tax
	Salary	Earnings		Earnings
Hanks, Timothy, President	156000	0	0.00	6500	94.25
Grath, John, VP Finance	138000	650	40.30	5750	83.38
James, Sally, VP Sales	69600	2900	179.80	2900	42.05
Kimmel, Joan, VP Mfg.	54000	2250	139.50	2250	32.63
Wie, Pam, VP Personnel	51600	2150	133.30	2150	31.18
Grant, Mary, VP Secretary	49200	2050	127.10	2050	29.73

Workings:
The FICA OASDI tax limit is $132900
FICA OASDI tax rate is 6.2%
FICA HI tax rate is 1.45%
Semimonthly earnings:
Hanks, Timothy, President	6500	=156000/24
Grath, John, VP Finance	5750	=138000/24
James, Sally, VP Sales	2900	=69600/24
Kimmel, Joan, VP Mfg.	2250	=54000/24
Wie, Pam, VP Personnel	2150	=51600/24
Grant, Mary, VP Secretary	2050	=49200/24
Cumulative earnings till Nov 1:
Hanks, Timothy, President	130000	=6500*20
OASDI Taxable Earnings,Nov 15:
Hanks, Timothy, President	2900	=132900-130000
Cumulative earnings till Dec 15:
Grath, John, VP Finance	132250	=5750*23
OASDI Taxable Earnings,Dec 31:
Grath, John, VP Finance	650	=132900-132250