Question

Paloma Co. has four employees. FICA Social Security taxes are 6.2% of the first $127,200 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 3.5% and SUTA taxes are 2.5%. 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 $ 126,100 $ 2,000 $ 284 Trey 126,300 900 145 Kiesha 6,900 450 39 Chee 1,250 400 30 In addition to gross pay, the company must pay two-thirds of the $60 per employee weekly health insurance; each employee pays the remaining one-third. 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 place

Answer 1

1) Employees' FICA Withholdings for Social Security
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	1100	6.20%	68.20
Trey	900	6.20%	55.80
Kiesha	450	6.20%	27.9
Chee	400	6.20%	24.8
		Total	176.7
2) Employees' FICA Withholdings for Medicare
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	2000	1.45%	29.00
Trey	900	1.45%	13.05
Kiesha	450	1.45%	6.53
Chee	400	1.45%	5.80
		Total	54.38
3) Employer's FICA Taxes for Social Security
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	1100	6.20%	68.20
Trey	900	6.20%	55.80
Kiesha	450	6.20%	27.9
Chee	400	6.20%	24.8
		Total	176.70
4) Employer's FICA Taxes for Medicare
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	2000	1.45%	29.00
Trey	900	1.45%	13.05
Kiesha	450	1.45%	6.53
Chee	400	1.45%	5.80
		Total	54.38
5) Employer's FUTA Taxes
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	0	3.50%
Trey	0	3.50%
Kiesha	100	3.50%	3.50
Chee	400	3.50%	14.00
		Total	17.50
6) Employer's SUTA Taxes
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	0	2.50%
Trey	0	2.50%
Kiesha	100	2.50%	2.50
Chee	400	2.50%	10.00
		Total	12.50
7) Each Employee's Net (take-home) Pay
Employee	Dali	Trey	Kiesha	Chee	Total
Gross Pay	2000.00	900.00	450.00	400.00	3750.00
Income tax withholding	284.00	145.00	39.00	30.00	498.00
FICA - Social Security	68.20	55.80	27.90	24.80	176.70
FICA - Medicare	29.00	13.05	6.53	5.80	54.38
Health Insurance	20.00	20.00	20.00	20.00	80.00
Net Pay	1598.80	666.15	356.57	319.40	2940.92
8) Total Payroll Related Expense for Each Employee
Employee	Dali	Trey	Kiesha	Chee	Total
Gross Pay	2000.00	900.00	450.00	400.00	3750.00
FICA - Social Security	68.20	55.80	27.90	24.80	176.70
FICA - Medicare	29.00	13.05	6.53	5.80	54.38
FUTA	0.00	0.00	3.50	14.00	17.50
SUTA	0.00	0.00	2.50	10.00	12.50
Health Insurance	40.00	40.00	40.00	40.00	160.00
Pension	160.00	72.00	36.00	32.00	300.00
Total Payroll Expense	2297.20	1080.85	566.43	526.60	4471.08