Tax:
It is a compulsory financial charge imposed by government on individuals and corporate, failure to pay which invites legal actions.
1.
Employee’s FICA for social security.
Explanation of Solution
Employee’s FICA for social security
Formula to calculate FICA for social security,
For A
Substitute $1600 for pay.
For C
Substitute $1,515 for pay.
For J
Substitute $475 for pay.
For M
Substitute $1,000 for pay.
Thus, FICA for social security of A is $99.20, C is $93.93, J is $29.45 and M is $62.
2.
Employee’s FICA Medicare taxes.
2.
Explanation of Solution
Employee’s FICA Medicare taxes
Formula to calculate FICA Medicare taxes,
For A
Substitute $2,500 for gross pay.
For C
Substitute $1,515 for gross pay.
For J
Substitute $475 for gross pay.
For M
Substitute $1,000 for gross pay.
Thus, FICA Medicare taxes for A are $36.25, Care $21.95, J are $6.89 and M are $14.50.
3.
Employer’s FICA for social security.
3.
Explanation of Solution
Employer’s FICA for social security
Formula to calculate FICA for social security,
For A
Substitute $1,600 for pay.
For C
Substitute $1,515 for pay.
For J
Substitute $475 for pay.
For M
Substitute $1,000 for pay.
Thus, FICA for social security of A is $99.20, Cis $93.93, J is $29.45 and M is $62.
4.
Employer’s FICA Medicare taxes
4.
Explanation of Solution
Employer’s FICA Medicare taxes
Formula to calculate FICA Medicare taxes,
For A
Substitute $2,500 for gross pay.
For C
Substitute $1,515 for gross pay.
For J
Substitute $475 for gross pay.
For M
Substitute $1,000 for gross pay.
Thus, FICA Medicare taxes for A are $36.25, C are $21.95, J are $6.89 and M are $14.50.
5.
Employer’s FUTA taxes.
5.
Explanation of Solution
Employer’s FUTA taxes
Formula to calculate FUTA taxes,
For A
Substitute $0 for pay.
For C
Substitute $0 for pay.
For J
Substitute $350 for pay.
For M
Substitute $0 for pay.
Thus, FUTA taxes for A are 0, C are 0, J are $2.10 and M are 0.
6.
Employer’s SUTA taxes
6.
Explanation of Solution
Employer’s SUTA taxes
Formula to calculate SUTA taxes
For A, substitute $0 for pay
For C, substitute $0 for pay.
For J, substitute $350 for pay.
For M, substitute 0 for pay
Thus, SUTA taxes for A are 0, C are 0, J are $6.130 and M are 0
7.
Employee’s net home pay
7.
Explanation of Solution
Employee’s net home pay
Employees | Gross Pay($) | Income Tax($) | Social Security($) | Medicare($) | Health insurance($) | Net Pay($) |
A | 2,500 | 198 | 99.20 | 36.25 | 25 | 2,141.55 |
C | 1,515 | 182 | 93.93 | 21.97 | 25 | 1,192.10 |
J | 475 | 32 | 29.45 | 6.89 | 25 | 381.66 |
M | 1,000 | 68 | 62 | 14.50 | 25 | 830.50 |
Total | 4,545.81 |
Table (1)
Thus, employee’s net pay is $4,545.81
8.
Employer’s total payroll related expense
8.
Explanation of Solution
Employer’s total payroll related expense
Employees | Gross Earning($) | Social Security($) | Medicare($) | FUTA($) | SUTA($) | Health insurance($) | Pension fund | Net Pay($) |
D | 2,500 | 99.20 | 36.25 | 0 | 0 | 25 | 125 | 2,785.45 |
T | 1,515 | 93.93 | 21.97 | 0 | 0 | 25 | 75.75 | 1,731.65 |
K | 475 | 29.45 | 6.89 | 2.10 | 6.13 | 25 | 23.75 | 568.32 |
C | 1,000 | 62 | 14.50 | 0 | 0 | 25 | 50 | 1,151.50 |
Total | 6,236.92 |
Table (2)
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Chapter 9 Solutions
FINANCIAL ACCOUNTING FUNDAMENTALS
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