Question

9. Adelphi Company purchased a machine on January 1, 2017, for $80,000.  The machine was estimated to have a service life of ten years with an estimated residual value of $5,000. After 4 years, Adelphi sold the machine on January 1, 2021 for $22,000. Adelphi uses the double declining method for depreciation. Using this information, how much is the gain or (loss) for the equipment sale on January 1, 2021? Enter a loss as a negative number.

10. Barbara is an employee of Baltimore Company. Baltimore Company pays employees the Friday after the wages are earned. Overtime in excess of 40 hours must be paid at 150% of the normal hourly rate.  Social Security taxes are 6.2% and Medicare taxes are 1.45%. The federal unemployment tax rate is 1.3% and the state unemployment tax rate is 3.0%. Barbara's wages, including the current pay period, will not exceed the limits for Social Security, Medicare and unemployment taxes. Barbara earns $18 per hour and worked 48 hours for the week ended January 13 , 2019. Baltimore will withhold $220 federal income taxes. Use this information to determine the total payroll tax expense for Baltimore Company as related to Barbara's earnings. (Round to the closest cent)

Answer 1

9. Straight-line depreciation rate = 100%/10 years = 10%

Double-declining depreciation rate = 10% x 2 = 20%

Year	Book Value Beginning of Year	x	Depreciation Rate	=	Annual Depreciation Expense	End of Year
						Accumulated Depreciation	Book Value
2017	80000	x	20%	=	16000	16000	64000
2018	64000	x	20%	=	12800	28800	51200
2019	51200	x	20%	=	10240	39040	40960
2020	40960	x	20%	=	8192	47232	32768

Gain or (loss) = Sales price - Book value = $22000 - $32768 = $-10768

10. Gross wages = (40 x $18) + (8 x $18 x 150%) = $720 + $216 = $936

Total payroll tax expense:
Social security taxes (6.2% x $936)	58.03
Medicare taxes (1.45% x $936)	13.57
Federal unemployment tax (1.3% x $936)	12.17
State unemployment tax (3.0% x $936)	28.08
Total payroll tax expense $	111.85