Practice Exam - Chapter 9
Reporting & Analyzing Current Liabilities
Dr. Fred Barbee
Solution to Problem #1
|
ACCT 201 Principles of Financial Accounting Practice Exam - Chapter 9 Reporting & Analyzing Current Liabilities Dr. Fred Barbee Solution to Problem #1 |
|
A company's employees had the following earnings records at the close of the current payroll period:
| Employees | Earnings Through Prior Pay Period |
Earnings this Pay Period |
| D. Adams | $11,300 |
$3,900 |
| J. Hess | 6,100 |
2,500 |
| R. Lui | 9,500 |
3,100 |
| T. Morales | 4,800 |
1,400 |
| L. Vang | 10,000 |
3,000 |
The company's payroll taxes expense on each employee's earnings includes: FICA Social Security taxes of 6.2% on the first $76,200 plus 1.45% FICA Medicare on all wages; 0.8% federal unemployment taxes on the first $7,000; and 2.5% state unemployment taxes on the first $7,000. Compute the employer's total payroll taxes expense for the current pay period.
Solution
| Employees | FICA
|
SUTA & FUTA |
| D. Adams | $3,900 |
|
| J. Hess | 2,500 |
$900 |
| R. Lui | 3,100 |
|
| T. Morales | 1,400 |
1,400 |
| L. Vang | 3,000 |
|
| Total | $13,900 |
$2,300 |
| FICA - Social Security | $13,900 x .062 | $861.80 |
| FICA - Medicare | $13,900 x .0145 | 201.55 |
| FUTA | $2,300 x .008 | 18.40 |
| SUTA | $2,300 x .025 | 57.50 |
| Total Employer Payroll Taxes | $1,139.25 |