Question

CIJE Computing payroll taxes P2 P3 BMX Company has one employee, FICA Social Security taxes are 6.2% of the first $128.400 paid to its entployee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7.000 paid to its employee Compute BMX's amounts for each of these Tour taxes as applied to the employee's gross earnings for September under each of three separate situa tions (a), (b), and (c). Round amounts to cents. Gross Pay through August 31 Gross Pay for September Check PUTA 5300 SUTA 532 40 $ 6,400 2000 122.100 5 800 2.100 8,000 Exercise 11-6

Answer 1

Situation A:

Gross Pay through August 31	Gross Pay for September	Gross Pay through September
6400	800	(6400 + 800) = $ 7200

Calculation of Taxes	Calculations	Amount
FICA Social Security	800 * 6.2%	49.6
FICA Medicare	800*1.45%	11.6
FUTA	600*0.60%	3.6
SUTA	600*5.4%	32.4

Calculation of taxable amount for FUTA and SUTA

Gross Pay through September	7200
Unemployment Limit	7000
Exempt amount	200
Current Earnings	800
Exempt amount	200
Taxable Amount	600

Situation B:

Gross Pay through August 31	Gross Pay for September	Gross Pay through September
2000	2100	(2000 + 2100) = $ 4100

Calculation of Taxes	Calculations	Amount
FICA Social Security	2100 * 6.2%	130.2
FICA Medicare	2100*1.45%	30.45
FUTA	2100*0.60%	12.6
SUTA	2100*5.4%	113.4

Situation C:

Gross Pay through August 31	Gross Pay for September	Gross Pay through September
122100	8000	(122100 + 8000) = $ 130100

Since earnings is greater than $7000, no FUTA and SUTA will be applicable.

Calculation of Taxable amount for FICA Social Security is as follows:

Gross Pay through September	130100
FICA Social Security limit	128400
Exempt amount	1700
Current Earnings	8000
Exempt amount	1700
Taxable Amount	6300

Hence,

Calculation of Taxes	Calculations	Amount
FICA Social Security	6300 * 6.2%	390.6
FICA Medicare	8000*1.45%	116
FUTA		0
SUTA		0